Question :
41) If the Fed concerned about a possible recession, it : 1238236
41) If the Fed is concerned about a possible recession, it ________ the federal funds rate, which ________ the quantity of reserves and ________ the amount of bank loans.
A) raises; decreases; decreases
B) lowers; decreases; decreases
C) lowers; increases; decreases
D) raises; increases; increases
E) lowers; increases; increases
42) The Fed is concerned about inflation. Its policy will ________ U.S. short-term interest rates and, in the foreign exchange market, lead to the value of the U.S. dollar ________.
A) lower; rising
B) raise; rising
C) raise; not changing
D) lower; falling
E) lower; not changing
43) If the Fed is concerned about inflation, its actions ________ long-term interest rates so that investment ________ and net exports ________.
A) lower; increases; increase
B) lower; increases; decrease
C) raise; decreases; decrease
D) lower; decreases; decrease
E) raise; increases; increase
44) When the Federal Reserve increases the federal funds rate, bank loans ________, the supply of loanable funds ________, and the real interest rate ________.
A) decrease; decreases; rises
B) do not change; decreases; rises
C) increase; increases; falls
D) increase; increases; rises
E) decrease; does not change; rises
45) A change in monetary policy affects
A) consumption expenditure, government expenditures on goods and services, and net exports.
B) consumption expenditure, investment, and net exports.
C) investment, government expenditures on goods and services, and net exports.
D) consumption expenditure, productivity, and net exports.
E) government expenditures on goods and services because it affects the government’s budget balance.
46) When the Fed ________, the U.S. foreign exchange rate falls.
A) sells government securities
B) buys government securities
C) raises the interest rate
D) raises taxes on interest income
E) increases the size of the multiplier
47) Suppose monetary policy results in the exchange rate falling. As a result,
A) net exports decrease.
B) net exports increase.
C) exports decrease and imports decrease.
D) exports increase and imports increase.
E) exports do not change because they are autonomous and imports decrease.
48) If the Fed increases interest rates, other things remaining the same, foreigners demand ________ dollars, thereby ________ the exchange rate.
A) more; increasing
B) more; decreasing
C) fewer; increasing
D) fewer; decreasing
E) the same number of; not affecting
49) When the exchange rate falls, imports ________ and exports ________.
A) increase; increase
B) increase; decrease
C) decrease; increase
D) decrease; decrease
E) decrease; do not change
50) If the Fed buys government securities, other things the same, the exchange rate ________ and U.S. exports ________.
A) rises; increase
B) rises; decrease
C) falls; increase
D) falls; decrease
E) falls; do not change because they are autonomous expenditure
