In order for the Fed to decrease interest rates, it must Question 6 options: 1)

Question

In order for the Fed to decrease interest rates, it must

Question 6 options:

1)

2)

3)

4)

5)

simply change the number.

What will happen to equilibrium RGDP and price level in the economy if firms are optimistic about future profits?

Question 9 options:

1)

2)

3)

4)

1)

request that Congress pass a law lowering rates.

2)

request that banks lower the rates they charge on loans.

3)

buy bonds from banks.

4)

sell bonds to banks.

5)

simply change the number.

What will happen to equilibrium RGDP and price level in the economy if firms are optimistic about future profits?

Question 9 options:

1)

equilibrium price level rises and equilibrium RGDP rises.

2)

equilibrium price level rises and equilibrium RGDP falls.

3)

equilibrium price level falls and equilibrium RGDP rises.

4)

equilibrium price level falls and equilibrium RGDP falls.

Explanation / Answer

a) FOr the FED to decrease the interest rates they need to increase the money supply in the market. For that, they will buy bonds from the market and given money in return. It will decrease the interest rates.

The answer is "C".

b) IF the firms are optimistic about the future profit they will invest more and this will increase the demand and raise the price in the market. The equilibrium price level will rise and equilibrium RDGP will rise. The answer is "A".

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