15. The money supply curve would shift right a. if the money demand curve shifted right. b. if the Federal Reserve chose to increase money supply c. if the interest rate increased. d. all of the above are correct. 16. Which of the following Fed actions would both increase the money supply? a. buy government bonds and raise the reserve requirement b. buy government bonds and lower the reserve requirement c. sell government bonds and raise the reserve requirement d. sell government bonds and lower the reserve requirement 17. People would tend to hold more money (in the form of cash) if the price level a. increases or their income increases. b. decreases or their income increases. . increases or their income decreases. d. decreases or their income decreases. 18. Which of the following is the right sequence? a. money supply increases, interest rate increases; investment increases; GDP increases b. money supply increases, interest rate decreases; investment decreases; GDP increases c. money supply increases, interest rate decreases; investment increases; GDP increases d. money supply increases; interest rate decreases, investment increases; GDP decreases 19. During recession, if the Federal Reserve decided to stimulate the economy, it could a. buy government bonds to lower the money supply; and thus raise interest rate to lower aggregate demand. b. buy government bonds to raise the money supply; and thus lower interest rate to raise aggregate demand. C. sell government bonds to lower the money supply; and thus raise interest rate to lower aggregate demand. sell government bonds to raise the money supply; and thus lower interest rate to raise aggregate demand. 20. If the economy is overheating, which of the following monetary policies is appropriate for the Federal Reserve to apply? a. Lower money supply; raise interest rate; lower aggregate demand; lower inflation. b. Raise money supply; lower interest rate; raise aggregate demand; lower unemployment. c. Lower money supply; raise interest rate; raise aggregate demand; increase GDP growth. d. All of the above are correct