Question : 71.If the Fed sells more bonds to the public, then : 1232982

71.If the Fed sells more bonds to the public, then the money supply will:   

A. Decrease and the aggregate demand curve will shift to the right.

B. Increase and the aggregate demand curve will shift to the right.

C. Increase and the aggregate demand curve will shift to the left.

D. Decrease and the aggregate demand curve will shift to the left.

72.Restrictive monetary policy will:   

A. Decrease the lending capacity for banks.

B. Reduce interest rates.

C. Cause a rightward shift of aggregate demand.

D. Raise the equilibrium price level.

73.To decrease the money supply the Fed can:   

A. Reduce the reserve requirement, raise the discount rate, or sell bonds.

B. Raise the reserve requirement, raise the discount rate, or sell bonds.

C. Raise the reserve requirement, reduce the discount rate, or buy bonds.

D. Raise the reserve requirement, raise the discount rate, or buy bonds.

74.When the Fed announces that it is raising the federal funds rate, this signals its intention to _______ bonds in the open market and _______ the money supply.   

A. Buy; reduce

B. Buy; increase

C. Sell; reduce

D. Sell; increase

75.As the money supply increases, interest rates _______ and aggregate demand shifts to the ______.   

A. Increase; left

B. Increase; right

C. Decrease; left

D. Decrease; right

76.When the Fed sells bonds in the open market, interest rates _______ and aggregate demand shifts to the ______.   

A. Rise; left

B. Rise; right

C. Fall; left

D. Fall; right

77.The shape of the _____ curve determines the impact of an aggregate demand shift on prices and output.   

A. Marginal revenue

B. Total cost

C. Production possibilities

D. Aggregate supply

78.The different shapes of the aggregate supply curve:   

A. Determine the level of reserves held by the banking system.

B. Result in the Fed’s need for total control of the money supply.

C. Determine the impact of monetary policy on price level and output.

D. Explain why the Fed must respond to market instability.

79.Given Keynesian assumptions about the shape of the aggregate supply curve and an economy suffering a recession, which of the following is most likely to occur if the Fed pursues expansionary monetary policy?   

A. The equilibrium price level and output will both increase until full employment is reached.

B. The equilibrium price level and output will both decrease.

C. The equilibrium price level will increase but output will stay the same.

D. The equilibrium output will increase but the price level will stay the same until full employment is reached.

80.Using aggregate supply and demand curves drawn according to the Keynesian view, which of the following will occur if the Fed buys bonds in the open market and the economy is below full employment?   

A. Aggregate demand will shift to the left and the unemployment rate will rise.

B. Aggregate demand will shift to the right and the unemployment rate will fall.

C. Aggregate demand will shift to the left and the price level will remain unchanged.

D. Aggregate demand will shift to the right and the price level will fall.