Analysis report the start of a severe recession during the quarter. If policymakers were to change each tool, what would you expect as it relates to changes?

1. Does the Federal Reserve buy or sell bonds?
2. Does the Federal Reserve raise or lower the reserve ratio?
3. Does the Federal Reserve raise or lower the discount rate?
4. Does the Federal Reserve raise or lower the interest rate on reserves?
5. 1-4, above, causes the excess reserves to increase or decrease?
6. 5, above, causes the federal fund rate to increase or decrease?
7. 6, above, causes the money supply to increase or decrease?
8. 7, above, causes the interest rate to increase or decrease?
9. 8, above, causes investment spending to increase or decrease?
10. 9, above, causes aggregate demand to increase or decrease?
11. 10, above, causes real GDP output to increase or decrease?
12. What do you expect the government to do from a fiscal policy perspective (increase or decrease government spending as well as increase or decrease taxes)?
13. What happens to aggregate demand?
14. What is a possible negative consequence of the above changes?