Foundations of Economics (8th Edition)
8th Edition
ISBN: 9780134486819
Author: Robin Bade, Michael Parkin
Publisher: PEARSON
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Chapter 33, Problem 1MCQ
To determine
To identify:
The option that correctly states the objective for achievement if Fed's dual mandate.
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When the Fed sells bonds, the amount of money in circulation in the economy_______ . This drives interest rates_________ , which causes businesses to invest________ in capital improvements such as new factories and upgraded equipment. The result is_________ in aggregate demand,________ in the equilibrium price level, and______ in the equilibrium level of real GDP.
The more bonds the central bank buys, the ____________the money supply grows, and the ______________ the inflation will be.
A. slower; lower
B. slower; higher
C. faster; lower
D. faster; higher
Interest rate Answer Bank increase in the
price level
Interest rate
10%
9
8
D
ง
2
Interest rate
10%
Money supply
9
8
Money supply
7
7
6
6
5
5
4
Money demand (1)
4
3
3
2
2
1
0
Money demand
0
1
2
345
6 7 8 9 10
1
2
3
4
Money (in billions)
Money demand
Money demand (1)
5 6 7 8 9 10
Money (in billions)
Answer Bank
decrease in the price level
increase in output
decrease in output
increase in the price level
Chapter 33 Solutions
Foundations of Economics (8th Edition)
Ch. 33 - Prob. 1SPPACh. 33 - Prob. 2SPPACh. 33 - Prob. 3SPPACh. 33 - Prob. 4SPPACh. 33 - Prob. 5SPPACh. 33 - Prob. 6SPPACh. 33 - Prob. 7SPPACh. 33 - Prob. 8SPPACh. 33 - Prob. 9SPPACh. 33 - Prob. 10SPPA
Ch. 33 - Prob. 11SPPACh. 33 - Prob. 1IAPACh. 33 - Prob. 2IAPACh. 33 - Prob. 3IAPACh. 33 - Prob. 4IAPACh. 33 - Prob. 5IAPACh. 33 - Prob. 6IAPACh. 33 - Prob. 7IAPACh. 33 - Prob. 8IAPACh. 33 - Prob. 9IAPACh. 33 - Prob. 10IAPACh. 33 - Prob. 11IAPACh. 33 - Prob. 12IAPACh. 33 - Prob. 1MCQCh. 33 - Prob. 2MCQCh. 33 - Prob. 3MCQCh. 33 - Prob. 4MCQCh. 33 - Prob. 5MCQCh. 33 - Prob. 6MCQCh. 33 - Prob. 7MCQ
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