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1/ Which of the following Fed actions increases the money supply? Decreasing the amount of loans made to commercial banks Selling government securities in the

1/ Which of the following Fed actionsincreasesthe money supply?

Decreasing the amount of loans made to commercial banks
Selling government securities in the open market
Increasing reserve requirements
Buying government securities in the open market
2/ Refer to the graph shown. Suppose the economy is initially at A but then the Fed adopts an expansionary monetary policy. The initial effect of this policy will be pressure to move the economy to:

LAS SAS, D SASO B A SAS, Price level C E AD, ADo AD2 Real output

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