chapter 33 homework

# Chapter 33 homework - 1.\$10, \$1000.\$2000, A)Increaseby2.5percentagepoints B)Increaseby1.5percentagepoints C)Decreaseby1.5percentagepoints D)De

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1.  A bond with no expiration has an original price of \$10,000 and a fixed annual interest payment of  \$1000. If the price of this bond decreases by \$2000, the interest rate in effect will: A) Increase by 2.5 percentage points B) Increase by 1.5 percentage points C) Decrease by 1.5 percentage points D) Decrease by 2.5 percentage points 2.  Assume that the MPC is .75. If the Federal Reserve increases the money supply and investment  spending increases by \$8 billion, then aggregate demand is likely to: A) Decrease by \$8 billion B) Increase by \$6 billion C) Increase by \$32 billion D) Increase by \$8 billion 3.  Assuming that the Federal Reserve Banks sell \$40 million in government securities to commercial  banks and the reserve ratio is 20 percent, then the effect will be to reduce: A) The potential money supply by \$400 million B) Excess reserves by \$8 million

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## This note was uploaded on 03/29/2010 for the course ECON 112 taught by Professor Smith during the Spring '10 term at Bowling Green.

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Chapter 33 homework - 1.\$10, \$1000.\$2000, A)Increaseby2.5percentagepoints B)Increaseby1.5percentagepoints C)Decreaseby1.5percentagepoints D)De

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