You have been hired as a Marco Economist by the President of the United States to help evaluate the recent announcement by Federal Reserve chairman Ben Bernanke that the FED will be increasing interest rates again. Ben Bernanke has justified the move on the grounds that the economy continues to be strong. Answer the following questions. Provide a graphical explanation for your answers whenever possible. 4. What happens to the interest rate? A. increase B. decrease C. remains unchanged 5. What happens to the aggregate Demand curve? A. increase (shifts to the right) B. decrease (shifts to the left) C. remains unchanged What is the effect on the foreign exchange market (the $ market)? 6. Demand? A. increase (shifts to the right) B. decrease (shifts to the left) C. remains unchanged 7. Supply? A. increase (shifts to the right) B. decrease (shifts to the left) C. remains unchanged

You have been hired as a Marco Economist by the President of the United States to help evaluate the recent announcement by Federal Reserve chairman Ben Bernanke that the FED will be increasing interest rates again. Ben Bernanke has justified the move on the grounds that the economy continues to be strong. Answer the following questions. Provide a graphical explanation for your answers whenever possible. 4. What happens to the interest rate? A. increase B. decrease C. remains unchanged 5. What happens to the aggregate Demand curve? A. increase (shifts to the right) B. decrease (shifts to the left) C. remains unchanged What is the effect on the foreign exchange market (the $ market)? 6. Demand? A. increase (shifts to the right) B. decrease (shifts to the left) C. remains unchanged 7. Supply? A. increase (shifts to the right) B. decrease (shifts to the left) C. remains unchanged

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter22: Aggregate Demand And Aggregate Supply

Section: Chapter Questions

Problem 12P

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You have been hired as a Marco Economist by the President of the United States to help evaluate the recentannouncement by Federal Reserve chairman Ben Bernanke that the FED will be increasing interest rates again.Ben Bernanke has justified the move on the grounds that the economy continues to be strong. Answer thefollowing questions. Provide a graphical explanation for your answers whenever possible. 1. What is the fed trying to do?A. slow down the economyB. stimulate the economyC. remains unchanged 2. How is the fed doing it?A. buying bondsB. selling bondsC. remains unchanged 3. What happens to bond prices?A. increaseB. decreaseC. remains unchanged 4. What happens to the interest rate?A. increaseB. decreaseC. remains unchanged
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