support the 44. Assume the Federal Reserve Board of Governors agrees to Presiden
ID: 1160153 • Letter: S
Question
support the 44. Assume the Federal Reserve Board of Governors agrees to President and Congress in fighting the current economic problem by s securities in an effort to cause aggregate demand, AD to (? or ? or stay the same). The steps through which aggregate demand is caused to (? or ? or stay the same) are as follows: the sale of government securities should cause the money supply to (? or ? or stay the same) which should cause real interest rates to (? or ? or stay the same) which, in turn, will cause investment spending by the Business sector to (? or ? or stay the same) and thus cause aggregate expenditure (AE) to ( or or stay the same) and aggregate demand (AD) (? or ? or stay the same). (You must correctly answer all 6 in order to receive full credit.) 45. Evidently, the type of monetary and fiscal policy measures taken in the previous question are designed to fight which economic problem? 46. The 1920's were known as the because .Explanation / Answer
44) When government securities are sold then the motive is to reduce money supply or take money out of the market . So , by selling securirties in an effort to cause AD to fall .
The steps through which AD is caused to fall are as follows : the sale of government securities should cause the money supply to fall which should cause real interest rate to (smaller money supplies tend to raise market interest rates) rise which in turn will cause investment spending by business sector to fall and thus cause AE to fall and AD to fall .
45) economic problem : Inflation
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