9. If the Fed wishes to conduct expansionary monetary policy, it should (select one)
a. Increase required reserve ratio
b. Decrease required reserve ratio
c. Sell T-Bills.
d. Decrease taxes.
10. If the Fed wishes to conduct contractionary monetary policy, it should (select one)
a. Decrease required reserve ratio.
b. Buy T-bills.
c. Sell T-Bills.
d. Increase taxes.
11. Suppose the Fed decreases the discount rate.
As a result of this policy, what will happen to the interest rates (select one)?
a. Interest rates will decrease.
b. Interest rates will increase.
c. Interest rates will stay the same.12. Suppose the Fed decreases the discount rate.
As a result of this policy, what will happen to the Aggregate Demand (AD) (select one)?
a. AD will shift to the right.
b. AD will shift to the left.
c. AD will stay the same.
13. Suppose interest rates increase.
As a result of this, what will happen to consumption (C) and investment (I) (select one)?
a. C will increase and I will decrease.
b. Both C and I will increase.
c. C and I will not change.
d. Both C and I will decrease.
e. C will decrease and I will increase.
14. Suppose the Fed decreases the discount rate.
As a result of this policy, what will happen to price level and GDP in the short-run (select one)?
a. Price level will increase while GDP will decrease.
b. Price level will decrease while GDP will increase.
c. Neither price level nor GDP will change.
d. Both price level and GDP will decrease.
e. Both price level and GDP will increase.
f. Price level will increase while GDP will remain the same.