The Fed could hold the interest rates constant by making the quantity of money adjust to match the quantity of money demanded at the chosen interest rate

1) Such a policy will ________ the inflation rate and ____ the price of bonds as the economy recovers from recession in the short run.

a. not change; lower

b. increase; raise

c. increase; not change

d. not change; raise

2) In the long run, the nominal interest rate will _____ and the price of bonds will _______.

a. rise; rise

b. remain constant; remain constant

c. rise; fall

d. fall; rise