All of the following are examples of contractionary MONETARY policy except A. In

Question

All of the following are examples of contractionary MONETARY policy except

A. Increase in taxes

B. Sell of bonds by the Federal reserve through their Open Market Operations

C. Increasing the required reserve ratio

D. Increasing the discount rate

The stock market crash in the 90s caused

A. aggregate supply to increase

B. long run aggregate supply to increase

C. aggregate demand to decrease

D. aggregate demand to increase

Using the Money Market curve; what would happen if there is a rise in the price level while at the same time the Federal Reserve has decided to increase the interest paid on the reserves. One should expect the interest rate to

A. none of the above

B. stay the same

C.decrease

D. increase

Explanation / Answer

1. A. Increase in taxes. Taxation is a tool of fiscal policy rather than monetary policy.

2. C. aggregate demand to decrease

3. D. increase

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