Need the answers to all please Question 7 (1 point) d The Federal Reserve wishes
ID: 1143231 • Letter: N
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Need the answers to all please Question 7 (1 point) d The Federal Reserve wishes to stimulate the economy during a recession. It chooses to use Open Market Operations. Which of the following choices below is consistent with their desires? The Fed sells securities on the open market. When the Fed collects the purchase price A) in cash the money supply is increased. The Fed purchases securities on the open market. When the Fed pays for the B) securities it has purchased, deposits in the banking system rise and the money supply increases. The Fed makes loans to banks so that the banks don't have to loan out as much C) money. The Fed prefers to reduce lending during a recession. The Fed increas&the Reserve Requirement during a recession to make sure that D) banks do no lend out as much during a recession.Explanation / Answer
7.
When there is recession in the economy, then there is a need of aggregate demand and it can be done by increasing the money supply and increasing government expenditure.
if the Federa Reserve wishes to stimulate the economy and uses open market operations, then Fed should purchase securities on the open market. When Fed pays for the securities it has purchased, deposits in the banking system rise and the money supply increase and it leads more demand for goods and services.
Hence option B is the correct answer.
15.
The option C is logically consistent with the equation of exchange and this is if the government raises the money supply at the same rate as the real economy grows, there will be no inflation because the goods and services production growth rate is equal to the growth rate of money supply.
Hence option c is the correct answer.
8.
When the Federal Reserve will pursue Contractionary Monetary Policy, then the money supply decreases and so the aggregate demand in the economy due to decreasing purchasing power.
It happens when the econom is booming or growing faster than can be sustained long-term. This is done so that high inflation rate could be avoided in the long-run.
Hence option c is the correct answer.
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