When the Fed decreases the money supply, interest rates
a. rise, causing velocity to fall.
b. fall, causing velocity to fall.
c. rise, causing velocity to rise.
d. fall, causing velocity to rise.
c
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A financial contract in which a bank agrees to sell the expected future returns from an underlying bank loan to a third party is referred to as:
A) loan sale B) loan commitment C) credit rationing D) microlending
Which self-correcting mechanism do businesses have but government agencies do not?
a. Competitors b. Budgets c. Contracts d. Administrative tasks
In 1981, the Reagan administration employed a policy that included tax ____ while at the same time the Federal Reserve's strategy was to combat ____
a. cuts; unemployment b. cuts; inflation c. hikes; unemployment d. hikes; inflation
The restrictive monetary policy followed by the Fed in the early 1980s
a. reduced both unemployment and inflation. b. reduced inflation significantly, but at the cost of a severe recession. c. reduced unemployment significantly, but at the cost of higher inflation. d. raised both unemployment and inflation.