3. Answer the following questions assuming the economy is in a recession and the FED decides...
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3. Answer the following questions assuming the economy is in a recession and the FED decides to buy bonds from the public: a. What is the impact of the FED's action on bank reserves? (1/2 Point) Increases OR Decreases b. What is the impact of the change in bank reserves on the money supply? (1/2 Point) Increases OR Decreases c. As the money supply changes, which direction does the money supply line move? (1/2 Point) Left Right d. The shift in the money supply line results in a new equilibrium with a: (1/2 Point) Higher interest rate OR Lower interest rate OR e. Draw the money supply and demand curves, properly labeling the x-axis and y-axis, to show the change in the money supply and the resulting impact on interest rates. (5 Points) f. As a result of the change in interest rates, investments: (1/2 Point) Increase OR Decrease g. The change in investments results in: (1/2 Point) o A decrease in output and a decrease in employment o A decrease in output and an increase in employment An increase in output and a decrease in employment o An increase in output and an increase in employment h. As a result of the change in employment, income: (1/2 Point) Increases OR Decreases i. The change in income causes consumption to: (1/2 Point) Increase OR Decrease j. As consumption changes, which direction does the demand curve for goods and services move? (1/2 Point) Left OR Right k. The shift in the demand curve for goods and services results in a new equilibrium with: (1/2 Point) Lower prices Higher prices 1. Draw the supply and demand curve for goods and services, properly labeling the x- axis and y-axis, to show the change in equilibrium. (5 Points) OR 3. Answer the following questions assuming the economy is in a recession and the FED decides to buy bonds from the public: a. What is the impact of the FED's action on bank reserves? (1/2 Point) Increases OR Decreases b. What is the impact of the change in bank reserves on the money supply? (1/2 Point) Increases OR Decreases c. As the money supply changes, which direction does the money supply line move? (1/2 Point) Left Right d. The shift in the money supply line results in a new equilibrium with a: (1/2 Point) Higher interest rate OR Lower interest rate OR e. Draw the money supply and demand curves, properly labeling the x-axis and y-axis, to show the change in the money supply and the resulting impact on interest rates. (5 Points) f. As a result of the change in interest rates, investments: (1/2 Point) Increase OR Decrease g. The change in investments results in: (1/2 Point) o A decrease in output and a decrease in employment o A decrease in output and an increase in employment An increase in output and a decrease in employment o An increase in output and an increase in employment h. As a result of the change in employment, income: (1/2 Point) Increases OR Decreases i. The change in income causes consumption to: (1/2 Point) Increase OR Decrease j. As consumption changes, which direction does the demand curve for goods and services move? (1/2 Point) Left OR Right k. The shift in the demand curve for goods and services results in a new equilibrium with: (1/2 Point) Lower prices Higher prices 1. Draw the supply and demand curve for goods and services, properly labeling the x- axis and y-axis, to show the change in equilibrium. (5 Points) OR
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a Increases b Increases c Right d Lower interest rate e Unfortunately I cant ... View the full answer
Related Book For
Investment Analysis and Portfolio Management
ISBN: 978-0538482387
10th Edition
Authors: Frank K. Reilly, Keith C. Brown
Posted Date:
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