Question 14 (1 point)

(04.06 MC) If the Federal Reserve sells $20,000 worth of government bonds to banks, what will happen to the money supply? Assume that the reserve requirement is 20 percent and that the banks hold no excess reserves.

a	It will increase by a maximum of $20,000.
b	It will decrease by a maximum of $20,000.
c	It will increase by a maximum of $100,000.
d	It will decrease by a maximum of $100,000.
e	The money supply will not change.

Question 15 (1 point)

(04.06 MC) Which of the following stands correct about the lags in fiscal and monetary policies?

a	The time required to identify a problem is greater in the case of fiscal policy.
b	More time is required to carry out a monetary policy decision.
c	The time required to identify a problem is greater in the case of monetary policy.
d	There is no lag time in carrying out a fiscal policy decision.
e	The lags in both fiscal and monetary policies are of the same magnitude.

Question 16 (1 point)

(04.07 LC) An increase in the market interest rate would cause the supply of loanable funds to ________ and the demand for loanable funds to ________.

a	increase, decrease
b	decrease, increase
c	increase, increase
d	decrease, decrease
e	remain constant, increase