6, 10, 12, 13, 16, 17

The amount of money that people demand is: 0 independent the interest rate. 0 positively or negatively related to the interest rate depending on the state of the economy. 0 negatively related to the interest rate. Q positively related to the interest rate. Incorrect Figure: Monetary Policy I Aggregate price level, P P 2 P1 * SRAS Y1 Y= = potential Real GDP output Refer to Figure: Monetary Policy I. If the economy is initially in equilibrium at E2 and the central bank chooses to sell Treasury bills shift to a(n) gap. O AD, will; AD2, closing; recessionary O AD2 will; the right, causing; inflationary O AD, will; the left, increasing; recessionary O AD2 will; AD1, causing; recessionary IncorrectLong-term interest rates affect the demand for money more than short-term interest rates. O False O True IncorrectFigure: Crowding Out Interest rate (%) SLFZ DiFI Quantity of loanable funds Use Figure: Crowding Out. The demand for loanable funds curve DLFI will shift to DLF2 when there is a(n): O decrease in the government budget deficit. O increase in the government budget deficit. O increase in private savings. decrease in private savings. IncorrectThe main objective of contractionary monetary policy is to: O increase investment. close a recessionary gap. O raise the level of potential output. O decrease aggregate demand. IncorrectWhich function is one that pertains to the Federal Reserve System? I. conducting fiscal policy II. examining and supervising commercial banks in the Fed regions III. evaluating corporate mergers II only I only O III only I, II, and III Incorrect