Q66 The Fed raised interest rates in 2004 and 2005. This implies, other things the same, that the Fed
increased the money supply because it was concerned about unemployment.
increased the money supply because it was concerned about inflation.
decreased the money supply because it was concerned about unemployment.
decreased the money supply because it was concerned about inflation.
Q67 Money Supply / Money Demand Graph
Suppose the Fed lowers the interest rate paid on reserves. Draw the money supply / money demand graph, starting from the initial equilibrium, then show clearly the impact on the real interest rate and the quantity of money. Use good labels. Upload your graph.
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Q68 Aggregate Supply / Aggregate Demand Graph
Suppose the Fed lowers the interest rate paid on reserves. Draw the Aggregate supply / aggregate demand graph, starting from the initial equilibrium, then show clearly the impact on prices and on GDP in both the short run and in the long run. Label the short run outcomes Ps and Ys and the long run outcomes P-L and Y-L.
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