SA) If the interest rate is above the Fed's target, the Fed should a buy bonds...

 

Transcribed Image Text:

SA) If the interest rate is above the Fed's target, the Fed should a buy bonds to increase bank reserves. b. buy bonds to decrease bank reserves. C. sell bonds to increase bank reserves. d. sell bonds to decrease bank reserves. B) The govemment buys new weapons system! The manufacturers of weapons pay their employees. The employees spend this money on goods and services. The fims from which the employees buy the goods and services pay their employees. This sequence of events illustrates a the accelerator effect. b. the multiplier effect. c. tbe chain effect. d. tbe bandwagon effect. C) Sometimes during wars, govemment expenditures are larger than nomal. To reduce the effects this spending creates on interest rates, a the Federal Reserve could increase the money supply by buying bonds. b. the Federal Reserve could increase the money supply by selling bonds. c. the Federal Reserve could decrease the money supply by buying bonds. d. the Federal Reserve could decrease the money supply by selling bonds. D) The natural rate of unemployment a is constant over time. b. yaries over time, but can't be changed by the govemment. c. is the unemployment sate that the economy tands to move to in the long run. d. depands on the rate at which the Fed increases the money supply. E) Fiscal policy refers to the idea that aggregate demand is affected by changes in a the money supply. b. govemment spending and taxes. C. trade policy. d. All of the above are correct. SA) If the interest rate is above the Fed's target, the Fed should a buy bonds to increase bank reserves. b. buy bonds to decrease bank reserves. C. sell bonds to increase bank reserves. d. sell bonds to decrease bank reserves. B) The govemment buys new weapons system! The manufacturers of weapons pay their employees. The employees spend this money on goods and services. The fims from which the employees buy the goods and services pay their employees. This sequence of events illustrates a the accelerator effect. b. the multiplier effect. c. tbe chain effect. d. tbe bandwagon effect. C) Sometimes during wars, govemment expenditures are larger than nomal. To reduce the effects this spending creates on interest rates, a the Federal Reserve could increase the money supply by buying bonds. b. the Federal Reserve could increase the money supply by selling bonds. c. the Federal Reserve could decrease the money supply by buying bonds. d. the Federal Reserve could decrease the money supply by selling bonds. D) The natural rate of unemployment a is constant over time. b. yaries over time, but can't be changed by the govemment. c. is the unemployment sate that the economy tands to move to in the long run. d. depands on the rate at which the Fed increases the money supply. E) Fiscal policy refers to the idea that aggregate demand is affected by changes in a the money supply. b. govemment spending and taxes. C. trade policy. d. All of the above are correct.

Answer rating: 100% (QA)

Solution A When the interest rate is above its target level the ... View the full answer