Use the following table to answer the next question. The money supply and investment are in billions.Money Supply (billions of dollars)Interest RateInvestment (billions of dollars)$507%$100606110705120804130903140Assume that the MPC is 0.9 and the reserve requirement is 0.2. If the Federal Reserve needs to increase aggregate demand by $100 billion at each price level to move the economy back to full employment and the current interest rate is 6%, then the Federal Reserve should ________ bonds on the open market equal to ________.
A. sell, $2 billion
B. buy, $2 billion
C. buy, $4 billion
D. sell, $4 billion
Answer: B
You might also like to view...
One of the most important determinants of a good's price elasticity of demand is
A) the profits of suppliers. B) the numbers of buyers in the market. C) the ease with which consumers can substitute other goods for that product. D) the cost of producing the good.
Deadweight loss is the result of:
a. disequilibrium. b. underproduction. c. overproduction. d. all of these are correct.
Suppose the U.S. dollar price of the Japanese yen decreases. Given this information, which of the following is correct?
A) The dollar has appreciated. B) The dollar has depreciated. C) The yen has appreciated. D) The yen price of the dollar decreased.
Is $1,000 received today worth as much as $1,000 received one year from now? Explain your answer
What will be an ideal response?