An increase in the target federal funds rate reduces investment for all of the following reasons except the fact that the increased federal funds rates causes

A- higher longterm interest rates.

B- reduced collateral and net worth.

C-an appreciated exchange rate.

D-

If a surprise increase in the target federal funds rate causes market participants to expect additional increases in the target rate, the effect of the increase of the target rate on shortterm interest rates will be

an increase less than the announced increase in the target rate.

an increase equal to the announced increase in the target rate.

an increase greater than the announced increase in the target rate.

no change in shortterm interest rates.

increased adverse selection and moral hazard.

3.

If Federal Reserve officials give speeches signaling that they intend to increase the target federal funds rate at their next meeting

market interest rates will not change.

market interest rates will increase after the next meeting.

market interest rates will increase at the time of the meeting.

market interest rates will increase before the meeting.

4.

A stock market crash

reduces wealth and shifts the AE curve to the left.

reduces the cost of raising funds by issuing stock, shifting the AE curve to the right.

reduces government purchases of goods and services, shifting the AE curve to the left.

increases bank lending, shifting the AE curve to the right.

5.

Investment will increase when

banks perceptions of the risk of lending increase.

regulators discourage banks from taking too much risk.

banks experience a capital crunch.

asset prices increase firms net worth.

6.

A tightening of monetary policy by the Fed reduces investment because

banks reduce lending.

reduced asset prices reduce consumers wealth.

the exchange rate appreciates.

firms earnings increase.

7.

A countercyclical policy response to a positive expenditure shock when there are time lags

keeps output from fluctuating.

will reduce output in a future year.

keeps inflation constant.

requires a reduction of inflation to keep the inflation rate from permanently increasing.

8.

A countercyclical policy that offsets an adverse expenditure shock is

a tax increase.

a reduction of real interest rates.

a cut in government spending to balance the budget.

an increased real interest rate.