- B) sell government secunities, lower reserve requirements, and lower the disco

Question

- B) sell government secunities, lower reserve requirements, and lower the discount rate. O D) sell government securities, raise reserve requirements, and raise the discount rate. and raise the discount rate. Save Question 21 (1 point) Monetary policy adviser Smith wants to increase aggregate demand (aggregate expenditure). Which of the following monetary policies would she suggest to achieve this goal? A) open market sales of bonds by the Federal Reserve O B) open market purchases of bonds by the Federal Reserve D) an increase in the discount rate and an increase in the Fed Funds rate. Save Question 22 (1 point) From an initial long-run macroeconomic equilibrium, if the Federal Reserve anticipa supply would grow significantly slower than aggregate demand, then the Federal Reserve would most likely that next year the long-run aggregate A) decrease interest rates. O B) increase interest rates. Oc) decrease income tax rates. O D) increase income tax rates. Save

Explanation / Answer

21) Option B is correct (OM purchase of bonds would increase the money supply in the market and increase the aggregate demand)

22) Option B is correct (Increase in interest rates would decrease the aggregate expenditure/aggregate demand to match the growth of LRAS)

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