1.An increase in the supply of bank loans ________ the supply of loanable funds so the real interest rate ________ and investment ________.

Select one:

a.increases; falls; increases

b.decreases; falls; increases

c.decreases; rises; increases

d.increases; falls; decreases

e.increases; rises; increases

2.A decrease in the federal funds rate

Select one:

a.decreases the demand for loanable funds, lowers the real interest rate, and decreases aggregate demand.

b.increases other short-term interest rates, decreases investment, and decreases aggregate demand.

c.decreases the supply of loanable funds, raises the real interest rate, and decreases aggregate demand.

d.lowers the exchange rate, increases the supply of loanable funds, and increases aggregate demand.

e.lowers other sort-term interest rate, raises the real interest rate, and increases aggregate demand.

3.By using open market operations, the Federal Reserve

Select one:

a.controls banks' demand for reserves, thereby keeping the federal funds rate equal to its target.

b.adjusts the demand of reserves to keep bank rates in line with the federal funds rate target.

c.adjusts the supply of reserves to keep the federal funds interest rate equal to its target.

d.None of the above answers is correct.

e.adjusts the supplyanddemand of reserves to keep the federal funds interest rate equal to its target.