MULTIPLE CHOICE! ONLY answer! NO explanation! 1. If the inflation rate tends to go up, then which of the following is the appropriate monetary policy that the Fed should conduct? Open market sale which will increase interest rates and decrease money supply Open market purchase which will increase interest rates and decrease money supply Open market purchase which will decrease interest rates and increase money supply Open market sale which sale which will decrease interest rates and increase money supply 2. If the Fed conducts Open Market Purchase, then: price of bonds increase, interest rates decrease and money supply decreases. price of bonds decrease, interest rates increase and money supply decreases. price of bonds increase, interest rates decrease and money supply increases. price of bonds decrease, interest rates decrease and money supply increases. 3. Which of the following is called the Federal Funds rate? The interest rate at which banks borrow money from the Fed. the interest rate at which one bank borrows money from another bank. the interest rate at which investors borrow money from banks. all of the above
MULTIPLE CHOICE! ONLY answer! NO explanation!
1. If the inflation rate tends to go up, then which of the following is the appropriate
Open market sale which will increase interest rates and decrease money supply
Open market purchase which will increase interest rates and decrease money supply
Open market purchase which will decrease interest rates and increase money supply
Open market sale which sale which will decrease interest rates and increase money supply
2. If the Fed conducts Open Market Purchase, then:
price of bonds increase, interest rates decrease and money supply decreases.
price of bonds decrease, interest rates increase and money supply decreases.
price of bonds increase, interest rates decrease and money supply increases.
price of bonds decrease, interest rates decrease and money supply increases.
3. Which of the following is called the Federal Funds rate?
The interest rate at which banks borrow money from the Fed.
the interest rate at which one bank borrows money from another bank.
the interest rate at which investors borrow money from banks.
all of the above
4. Which of the following statement(s) is true?
If income increases, then money demand increases
If the price level increases, then money demand increases
If interest rate increases, then money demand decreases
All of the above
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