38.When the money supply increases, market rates generally move __________ and banks are _____ to make loans.

a. higher | disincentivized

b. higher | incentivized

c. lower | disincentivized

d. lower | incentivized

39.Risk is divided into 2 components:

a. Idiosyncratic risk, which is diversifiable and company specific risk, which is not.

b. Systematic risk, which is diversifiable and market risk, which is not.

c. Company-specific risk, which is diversifiable and systematic risk, which is not.

d. Market risk, which is diversifiable and Idiosyncratic risk, which is not.

40.To reduce economic activity, the Fed will normally _______ bonds through its open market operations. This has the effect of _________ market interest rates.

a. buy | reducing

b. sell | reducing

c. buy | increasing

d. sell | increasing