Consider the number to the appropriate. Can the Fed attain a​ $900 billion money supply​ (MS) AND a​ 5% interemainder rate​ (point C)?A.Yes. The Fed have the right to target the money supply or the interemainder rate.B.No. The Fed does not regulate the money supply.C.No. The Fed cannot targain both the money supply and also the interest price at the same time.D.Yes. Controlling the money supply sets the interemainder price.

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Suppose the economic climate is in equilibrium in the initially duration at point A. In the second​ period, the economic situation reaches allude B. What plan would certainly the Fed likely go after in order to relocate ADVERTISEMENT 2 to AD Subscript 2 comma plan and also reach equilibrium​ (point C) in the second​ period? ​ (What policy will certainly increase the price level and rise actual real​ GDP?)A.Open sector purchase of federal government securitiesB.Increase the reserve requirementC.Decrease taxesD.Increase the discount rate
The Fed buys and also sells bondsbuys and also sells bonds as a component of its plan to reach every one of the following objectives​ except:A.Stability of financial sectors and establishments.B.Price stability.C.High unemployment.D.Economic development.
The number to the best illustrates the economic situation making use of the Dynamic Aggregate Demand and Aggregate Supply ModelIf actual genuine GDP in 2006 occurs at point B and also potential GDP occurs at LRAS 06 we would suppose the Federal Reserve Bank to pursue________________ monetary plan.Actual actual GDP-----Potential actual GDP-----Price level-----Unemployment-----
a contractionaryActual - decreasespotential - does not changeprice level- decreasesjoblessness - increases
In the figure to the​ appropriate, as soon as the money supply enhanced from MS 1 to MS 2​,the equilibrium interest rate dropped from​ 4% to​ 3%. Why?A.Increased demand also for Treasury securities drives down their interest rate.B.​At first, firms organize more money than they desire loved one to various other financial assets.C.Increased demand also for Treasury securities drives up their prices.D.All of the over.

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In the number to the​ right, the economy experiences inflation in the second duration. What would certainly be the​ Fed"s reactivity if actual real GDP occurs at allude B and also potential GDP occurs at LRAS 2​?
As the figure to the right​ shows, the Fed can impact both the money supply and also interemainder prices.​ However, in recent​ years, the Fed targets interest rates in financial policy more often than it does the money supply. Which interest price does the Fed​ target?A.The​ momentary real interest rateB.The federal funds rateC.The discount rateD.The​ long-term nominal interest rate
The figure to the appropriate illustrates a dynamic AD-AS modelSuppose the economy is in equilibrium in the initially period at point A. In the second​ duration, the economic climate reaches allude B.We would certainly suppose the Fed to seek what form of plan in order to relocate ADVERTISEMENT 2 to AD Submanuscript 2 comma policy and also reach equilibrium​ (point C) in the second​ period?-----If the Federal Reserve​ Bank"s policy is​ effective, what is the effect on the following macroeconomic​ indicators?Actual real​ GDP:-----Potential real​ GDP:-----Price​ level:​-----Unemployment:-----
expansionary monetary policyActual real​ GDP: increasePotential real​ GDP:does not changePrice​ level: increase​Unemployment: decrease
How execute investment financial institutions differ from commercial​ banks? ​(Mark all that​ apply.)A.Investment financial institutions mostly perform not lend to households.B.Commercial banks are financial advisors to firms issuing stocks.C.Investment financial institutions take deposits.D.Investment banks do not take deposits.E.Commercial financial institutions perform not lend to households.
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