Suppose the Fed conducts an open market sale. We can expect this transaction to A) reduce the money supply, increase bond prices, and lower interest rates. B) increase the money supply, lower bond prices, and lower interest rates. C) increase the money supply, raise bond prices, and lower interest rates. D) reduce the money supply, reduce bond prices, and increase interest rates.
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25. |
Suppose the Fed conducts an open market sale. We can expect this transaction to |
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A) |
reduce the money supply, increase |
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B) |
increase the money supply, lower bond prices, and lower interest rates. |
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C) |
increase the money supply, raise bond prices, and lower interest rates. |
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D) |
reduce the money supply, reduce bond prices, and increase interest rates. |
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26. |
If the economy experiences an inflationary gap, a contractionary |
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A) |
increase real |
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B) |
increase real GDP and decrease the price level. |
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C) |
decrease real GDP and increase the price level. |
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D) |
decrease real GDP and decrease the price level. |
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27. |
Suppose the economy experiences a recessionary gap. Expansionary monetary policy will |
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A) |
increase interest rates and increase the bond prices. |
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B) |
increase interest rates and decrease the bond prices |
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C) |
decrease interest rates and increase the bond prices |
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D) |
decrease interest rates and decrease the bond prices |
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