11) Which of the following increases the quantity of money? A) an individual's cash withdrawal from a bank B) an individual's purchase of a government security from the Fed C) the Fed's purchase of a government security D) an increase in the government's budget deficit
11) Which of the following increases the quantity of money?
A) an individual's cash withdrawal from a bank
B) an individual's purchase of a government security from the Fed
C) the Fed's purchase of a government security
D) an increase in the government's budget deficit
12) Open market purchases by the Federal Reserve System (the Fed)
A) raise the federal funds rate.
B) increase bank reserves.
C) occur when the Fed wants to decrease the quantity of money.
D) All of the above answers are correct.
13) When the Fed raises the federal funds rate,
A) net exports increase.
B) the value of the dollar falls on the foreign exchange market.
C) the value of the dollar rises on the foreign exchange market.
D) consumption increases.
14) If the Fed raises the federal funds rate so that the exchange rate rises, then imports ________ and exports ________.
A) increase; increase
B) increase; decrease
C) decrease; increase
D) decrease; decrease
15) If the Fed lowers the federal funds rate so that the exchange rate falls, then imports ________ and exports ________.
A) increase; increase
B) increase; decrease
C) decrease; increase
D) decrease; decrease
16) If the U.S. interest rate rises, the exchange rate ________ and net exports ________.
A) rises; increase
B) rises; decrease
C) falls; increase
D) falls; decrease
17) When the Fed lowers the federal funds rate, the U.S. dollar ________ on the foreign exchange market and ________.
A)
B) appreciates; aggregate demand decreases
C) depreciates; the increase in imports is greater than the increase in exports
D) depreciates; aggregate demand increases
18) The ripple effects that occur when the Fed changes the federal funds rate include ________.
A) a decrease in consumption and investment
B) an increase in net exports
C) a decrease in interest rates
D) an increase in short-run
19) When the Fed raises the federal funds rate, in the foreign exchange market people ________ dollars and the price of the dollar ________ on the foreign exchange market.
A) sell; rises
B) sell; falls
C) buy; rises
D) buy; falls
20) If the Federal Reserve lowers the Federal funds rate,
A) other short-term interest rates fall.
B) other short-term interest rates rise.
C) the exchange rate falls.
D) Both answers A and C are correct.
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