QUESTION 14

An expansionary fiscal policy may not work as policymakers intend it to work because of

a.crowding out.

b.crowding in.

c.the position of the production possibilities frontier.

d.a and b

QUESTION 16

Which of the following isnota function of the Fed?

a.to serve as a fiscal agent (bank) for commercial banks.

b.to hold depository institutions' reserve.

c.to clear the checks for member banks.

d.to borrow money from the banks

QUESTION 18

Suppose that during a period of inflation, the Fed reduced its holding of U.S. securities from $600 billion to $580 billion. This indicates that the Fed was

a.seeking to reduce the money supply to decrease inflation.

b.trying to force Congress to decrease taxes.

c.expanding the money supply and stimulating employment.

d.expanding the money supply, even though the existing inflation suggested a restrictive policy would be more appropriate.