Practice Quiz Chap 12 - POP QUIZ WORKSHEET 4 :CHAPTER 12...

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POP QUIZ WORKSHEET 4 :CHAPTER 12 NAME: __________________________________ 1. According to the AS/AD model, which of the following describes the cause-effect relationships through which a change in money supply affects the level of economic activity? a. An increase in the money supply will reduce interest rates, increase investment spending, and increase the level of economic activity. b. An increase in the money supply will reduce interest rates, decrease investment spending, and decrease the level of economic activity. c. An increase in interest rates will increase the money supply, decrease investment spending, and decrease the level of economic activity. d. An increase in aggregate expenditures will decrease the money supply, increase inflation, and decrease the level of economic activity. 2. To offset a recession the Fed should: a. use contractionary monetary policy. b. decrease required reserves, decrease the discount rate, and/or buy U.S. government securities on the open market.
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Practice Quiz Chap 12 - POP QUIZ WORKSHEET 4 :CHAPTER 12...

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