# In exhibit 20 3 assume an equilibrium at e 2 with the

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Chapter 10 / Exercise 62
Applied Calculus
Berresford/Rockett
Expert Verified
74.In Exhibit 20-3, assume an equilibrium at E2with the money supply at \$100 billion and the interest rate at 15 percent. The Fed uses its policy tools to move the economy to a new equilibrium at E1with amoney supply of 150 billion and an interest rate of 10 percent. As part of the adjustment to the new equilibrium, we would expect the:a.price of bonds to rise.b.price of bonds to remain unchanged.c.price of bonds to fall.d.none of the above.ANS:A
PTS:1DIF:DTOP:Change in money supplyTYP:CA75.As shown in Exhibit 20-3, assume the money supply curve shifts rightward from MS1to MS2and the economy is operating along the intermediate segment of the aggregate supply curve. The result will be a:
PTS:1DIF:DTOP:Change in money supplyTYP:CA76.Suppose that the Fed makes a \$100 billion open-market sale of Treasury bonds, and the money multiplier is 6. Which of the following impacts are most likely to result?
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Chapter 10 / Exercise 62
Applied Calculus
Berresford/Rockett
Expert Verified
PTS:1DIF:DTOP:Keynesian transmission mechanismTYP:CA77.If the Fed reduces the discount rate, which of the following are most likely to result?
PTS:1DIF:DTOP:Keynesian transmission mechanismTYP:CA78.Starting from a position of macroeconomic equilibrium at below the full-employment level of real GDP, an increase in the money supply will:a.raise interest rates, prices, and reduce real GDP.b.raise interest rates, lower prices, and leave real GDP unchanged.c.raise interest rates, lower prices, and leave real GDP unchanged.d.lower interest rates, raise prices, and increase real GDP.ANS: D
PTS:1DIF:DTOP:Keynesian transmission mechanismTYP:CA