quanda34 - Chapter 34 1. If a country's central bank were...

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Economics 1 Chapter 34 1. If a country’s central bank were to engage in activist stabilization policy, in which direction should it move the money supply in response to the following events? a. A wave of optimism boosts business investment and household consumption. Answer: Decrease the money supply b. To balance its budget, the government raises taxes and reduces expenditures. Answer: Increase the money supply c. OPEC raises the price of crude oil. Answer: Increase the money supply d. The taste for the country’s products amongst the residents of other countries declines. Answer: Increase the money supply e. The stock market falls. Answer: Increase the money supply 2. If a country’s central bank were to engage in activist stabilization policy, in which direction should it move interest rates in response to the same events listed in the previous question? a. A wave of optimism boosts business investment and household consumption. Answer: Increase interest rates b. To balance its budget, the government raises taxes and reduces expenditures. Answer: Decrease interest rates c. OPEC raises the price of crude oil. Answer:
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quanda34 - Chapter 34 1. If a country's central bank were...

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