Which of the following are included in expansionary monetary policy? (Select all that are correct) increase discount rate increase federal funds rate increase reserve requirement buy bonds decrease discount rate decrease reserve requirement decrease federal funds rate sell bonds 2. If the Federal Reserve would like to correct a recessionary gap, it would increase the discount rate. increase the reserve requirement. conduct an open market sale. conduct an open market purchase. increase the federal funds rate. 3. Which of the following reflects the order of operations when the Fed buys bonds on the open market? money supply increases, interest rates decrease, investment spending increases, AS shifts right. money supply decreases, interest rates increase, investment spending decreases, AD shifts left. money supply increases, interest rates increase, investment spending increases, AD shifts right. money supply decreases, interest rates increase, investment spending decreases, AS shifts left. money supply increases, interest rates decrease, investment spending increases, AD shifts right. 4. If interest rates increase from 8% to 9½%, we would expect to see an increase in the demand for money. a decrease in the demand for money. an increase in the quantity of money demanded. a decrease in the quantity demanded of money. no change in the demand for money. 5. If the Fed enacts the proper policy to solve the problem in the economy illustrated in the graph above, then the money supply would increase, interest rates would increase, investment spending would decrease, and AD curve would shift left. increase, interest rates would decrease, investment spending would increase, and AD curve would shift left. decrease, interest rates would increase, investment spending would decrease, and AD curve would shift right. decrease, interest rates would decrease, investment spending would increase, and AD curve would shift left. decrease, interest rates would increase, investment spending would decrease, and AD curve would shift left. 6. If inflation increased to 4% and unemployment was listed at 8%, which of the following policies would an economist most likely recommend using? Decrease the reserve requirement and buy bonds. Increase defense spending and increase the discount rate. Increase personal income taxes and sell securities bonds. Decrease funding for road projects and decrease the discount rate. Sell bonds and decrease personal income taxes. 7. If the Federal Reserve conducts easy money policy to expand the money supply, then nominal interest rates will decrease and investment spending will increase. nominal interest rates will decrease and investment spending will decrease. nominal interest rates will decrease and price level spending will decrease. nominal interest rates will increase and price level spending will increase. nominal interest rates will increase and investment spending will decrease. 8. Monetary policy is made by which part of the Federal Reserve? the Board of Governors. the Federal Open Market Committee. the Federal Securities Commission. the Chairman of the Fed. the Securities and Exchange Commission 9. If the Federal Reserve increases the discount rate, how are interest rates and real GDP affected? Interest Rates / Real GDP Increase / Decrease Increase / Increase Decrease / Decrease Decrease / Increase Decrease / No change 10. If the economy is suffering from inflation, the Federal Reserve should buy bonds and raise the discount rate. buy bonds and lower the discount rate. sell bonds and raise the reserve requirement. sell bonds and lower the reserve requirement. sell bonds and lower the discount rate. 11. Which of the following reflects the order of operations when the Fed lowers the discount rate? money supply increases, interest rates decrease, investment spending increases, AS shifts right. money supply decreases, interest rates increase, investment spending decreases, AD shifts left. money supply increases, interest rates increase, investment spending increases, AD shifts right. money supply decreases, interest rates increase, investment spending decreases, AS shifts left. money supply increases, interest rates decrease, investment spending increases, AD shifts right Description
Which of the following are included in expansionary monetary policy? (Select all that are correct)
increase discount rate
increase federal funds rate
increase reserve requirement
buy bonds
decrease discount rate
decrease reserve requirement
decrease federal funds rate
sell bonds
2.
If the Federal Reserve would like to correct a recessionary gap, it would
increase the discount rate.
increase the reserve requirement.
conduct an open market sale.
conduct an open market purchase.
increase the federal funds rate.
3.
Which of the following reflects the order of operations when the Fed buys bonds on the open market?
money supply increases, interest rates decrease, investment spending increases, AS shifts right.
money supply decreases, interest rates increase, investment spending decreases, AD shifts left.
money supply increases, interest rates increase, investment spending increases, AD shifts right.
money supply decreases, interest rates increase, investment spending decreases, AS shifts left.
money supply increases, interest rates decrease, investment spending increases, AD shifts right.
4.
If interest rates increase from 8% to 9½%, we would expect to see
an increase in the demand for money.
a decrease in the demand for money.
an increase in the quantity of money demanded.
a decrease in the quantity demanded of money.
no change in the demand for money.
5.
If the Fed enacts the proper policy to solve the problem in the economy illustrated in the graph above, then the money supply would
increase, interest rates would increase, investment spending would decrease, and AD curve would shift left.
increase, interest rates would decrease, investment spending would increase, and AD curve would shift left.
decrease, interest rates would increase, investment spending would decrease, and AD curve would shift right.
decrease, interest rates would decrease, investment spending would increase, and AD curve would shift left.
decrease, interest rates would increase, investment spending would decrease, and AD curve would shift left.
6.
If inflation increased to 4% and unemployment was listed at 8%, which of the following policies would an economist most likely recommend using?
Decrease the reserve requirement and buy bonds.
Increase defense spending and increase the discount rate.
Increase personal income taxes and sell securities bonds.
Decrease funding for road projects and decrease the discount rate.
Sell bonds and decrease personal income taxes.
7.
If the Federal Reserve conducts easy money policy to expand the money supply, then
nominal interest rates will decrease and investment spending will increase.
nominal interest rates will decrease and investment spending will decrease.
nominal interest rates will decrease and price level spending will decrease.
nominal interest rates will increase and price level spending will increase.
nominal interest rates will increase and investment spending will decrease.
8.
Monetary policy is made by which part of the Federal Reserve?
the Board of Governors.
the Federal Open Market Committee.
the Federal Securities Commission.
the Chairman of the Fed.
the Securities and Exchange Commission
9.
If the Federal Reserve increases the discount rate, how are interest rates and real GDP affected?
Interest Rates / Real GDP
Increase / Decrease
Increase / Increase
Decrease / Decrease
Decrease / Increase
Decrease / No change
10.
If the economy is suffering from inflation, the Federal Reserve should
buy bonds and raise the discount rate.
buy bonds and lower the discount rate.
sell bonds and raise the reserve requirement.
sell bonds and lower the reserve requirement.
sell bonds and lower the discount rate.
11.
Which of the following reflects the order of operations when the Fed lowers the discount rate?
money supply increases, interest rates decrease, investment spending increases, AS shifts right.
money supply decreases, interest rates increase, investment spending decreases, AD shifts left.
money supply increases, interest rates increase, investment spending increases, AD shifts right.
money supply decreases, interest rates increase, investment spending decreases, AS shifts left.
money supply increases, interest rates decrease, investment spending increases, AD shifts right
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