Question 1 (4.09)

Which of the following holds true when the Fed decides to buys bonds in the economy?

AMoney supply will increase.

BNominal interest rate will rise.

CAggregate demand will fall.

DUnemployment will rise.

EPrice level will fall.

Question 2

Eggs functioned as money in many agrarian economies in the 19th century. If a farmer compares his goat's worth at 1,500 eggs with his cow's worth of 4,500 eggs, which function of money is he using?

AStore of wealth

BMeans of payment

CMedium of exchange

DUnit of account

EStore of value

Question 3

Use the graph to answer the question that follows.