The Federal Open Market Committee(Points : 2)

operates with almost complete discretion over monetary policy.

is required to increase the money supply by a given growth rate each year.

is required to keep the interest rate within a range set by Congress.

is required by its charter to change the money supply using a complex formula that concerns the tradeoff between inflation and unemployment.

Question 2.2.If a country has net exports of $8 billion and sold $40 billion of goods and services abroad, then it has(Points : 2)

$48 billion of imports and $40 billion of exports. $48 billion of exports and $40 billion of imports. $40 billion of imports and $32 billion of exports. $40 billion of exports and $32 billion of imports.

Question 3.3.If the government cuts the tax rate, workers get to keep(Points : 2)

less of each additional dollar they earn, so work effort increases, and aggregate supply shifts right. less of each additional dollar they earn, so work effort decreases, and aggregate supply shifts left. more of each additional dollar they earn, so work effort increases, and aggregate supply shifts right. more of each additional dollar they earn, so work effort decreases, and aggregate supply shifts left.

Question 4.4.Which of the following are effects of an increase in government spending financed by a tax increase?(Points : 2)

the tax increase reduces consumption; the change in the interest rate reduces residential construction the tax increase reduces consumption; the change in the interest rate raises residential construction the tax increase raises consumption; the change in the interest rate reduces residential construction the tax increase raises consumption; the change in the interest rate reduces residential construction

Question 5.5.Which of the following sequences best explains the negative slope of the aggregate-demand curve?(Points : 2)

price level demand for money equilibrium interest rate quantity of goods and services demanded price level demand for money equilibrium interest rate quantity of goods and services demanded price level demand for money equilibrium interest rate quantity of goods and services demanded price level equilibrium interest rate demand for money quantity of goods and services demanded

Question 6.6.If businesses and consumers become pessimistic, the Federal Reserve can attempt to reduce the impact on the price level and real GDP by(Points : 2)

increasing the money supply, which raises interest rates. increasing the money supply, which lowers interest rates. decreasing the money supply, which raises interest rates. decreasing the money supply, which lowers interest rates.

Question 7.7.When aggregate demand shifts right along the short-run aggregate supply curve, unemployment(Points : 2)

falls, so there are upward pressures on wages and prices. falls, so there are downward pressures on wages and prices. rises, so there are upward pressures on wages and prices. rises, so there are downward pressures on wages and prices.