Question
Suppose, at a given federal funds rate, there is an excess supply of reserves in the federal funds market. If the Fed wants the federal
Suppose, at a given federal funds rate, there is an excess supply of reserves in the federal funds market. If the Fed wants the federal funds rate to stay at that level, then it should undertake an ......... open market ________ of bonds, everything else held constant. If the Fed does nothing, however, the federal funds rate will ________.
Group of answer choices
defensive; purchase; rise
dynamic; purchase; rise
dynamic; sale; fall
defensive; sale; fall
If initially the money supply is $3 trillion, velocity is 4, the price level is 2, and real GDP is $6 trillion, under common assumptions of the quantity theory of money, a rise in the money supply to $6 trillion will most likely ...........
Group of answer choices
raise the price level to 3 and lower velocity to 3.
raise the real GDP to $12 trillion.
raise the price level to 4.
cause velocity to rise to 8.
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