Label each of the following statements true, false, or uncertain. Explain briefly. a) The term investment, as used by economists, refers to the purchase of bonds and shares of stock b) The central bank can increase the supply of money by selling bonds in the market for c) Bond prices and interest rates always move in opposite directions. d) If government spending and taxes increase by the same amount, the IS curve does not shift. e) When banks hold only a fraction of deposits in reserve, banks create money. At the end of this process of money creation, the economy is more liquid in the sense that there is more of the medium of exchange, and the economy is wealthier than before.

Label each of the following statements true, false, or uncertain. Explain briefly. a) The term investment, as used by economists, refers to the purchase of bonds and shares of stock b) The central bank can increase the supply of money by selling bonds in the market for c) Bond prices and interest rates always move in opposite directions. d) If government spending and taxes increase by the same amount, the IS curve does not shift. e) When banks hold only a fraction of deposits in reserve, banks create money. At the end of this process of money creation, the economy is more liquid in the sense that there is more of the medium of exchange, and the economy is wealthier than before.

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter15: Monetary Policy

Section: Chapter Questions

Problem 12QP

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