Question

1. Which of the following sequence of events follows an expansionary monetary policy?

A) ↑ interest rate → ↑ investment → ↓ total demand → ↑ real GDP

B) ↓ interest rate → ↓ investment → ↑ total demand → ↑ real GDP

C) ↑ interest rate → ↓ investment → ↓ total demand → ↓ real GDP

D) ↓ interest rate → ↑ investment → ↑ total demand → ↑ real GDP 

 

2. The Fed's efforts to stimulate and make the economy grow to require that the Fed:

A) sell bonds to raise the interest rates.

B) sell bonds to lower the interest rates.

C) buy bonds to lower the interest rates.

D) buy bonds to raise the interest rates.

 

3. An appreciation of the U.S. dollar will likely cause U.S. exports to ________ and U.S. imports to ________.

A) decrease; decrease

B) increase; decrease

C) increase; increase

D) decrease; increase