If the economy is in a recession, then the unemployment rate is _____ than the natural rate and _____ monetary policy required to achieve full employment.

Question 25 options:

greater; contractionary

greater; expansionary

less; contractionary

less; expansionary

If the economy is in a recession, optimal monetary policy to achieve full employment would be _____.

Question 26 options:

Decrease taxes

increase government spending

decrease interest rates

Increase taxes

Suppose the economy is in an expansion.If the central bank intervenes to eliminate the expansionary gap, then in the long-run, the inflation rate will be _____ than had they not intervened.

Question 27 options:

greater

less

no different

not enough information

Open-market operations are:

Question 20 options:

sales or purchases of government securities, by the Fed, to or from banks on the open market.

regulations that set the minimum fraction of deposits banks must hold in reserve.

operations that allow any bank to borrow reserves from the Fed at a special interest rate, called the discount rate.

the purchase and sale of financial instruments on the open market.

Which of the following would cause the money demand curve to shift to the left?

Question 21 options:

An increase in interest rates

An increase in the inflation rate

A technological advancement

An increase in GDP

According to the liquidity-preference model, when the money supply increases, _____.

Question 22 options:

interest rates decrease

interest rates increase

interest rates may either increase or decrease (indeterminate)

not enough information

Suppose Bank X currently has $50M in demand deposits and $12M in reserves.Bank Xs reserve ratio is _____.

Question 8 options:

10%

12%

50%

none of the above

Suppose Bank X currently has $50M in demand deposits and $12M in reserves.If all the banks in the economy have the same reserve ratio as Bank X, then the money multiplier in the economy is _____.

Question 9 options:

2.4

4.17

8.33

none of the above

Suppose that in an economy there is $50M of currency in circulation and $90M of reserves in the banking system.If the money multiplier is 4, then the money supply is _____.

Question 10 options:

$140M

$360M

$560M

none of the above