16) Expansionary monetary policy a) Decreases private investment. b) Increases a

ID: 1156966 • Letter: 1

Question

16) Expansionary monetary policy

a) Decreases private investment.

b) Increases aggregate demand.

c) a and b.

d) None is correct.

17) Which of the following is true?

a) To tackle inflation, the Fed sells treasury bills, thereby decreases the money supply.

b) To tackle inflation the Fed purchases treasury bills, thereby decreases the money supply.

c) To tackle inflation the Fed sells treasury bills, thereby increases the Federal Funds Rate.

d) None of the above.

e) a and c.

18) Contractionary monetary policy

a) Decreases private investment.

b) Increases aggregate demand.

c) a and b.

d) None is correct

a) "B"

An expansionary monetary policy will increase the aggregate demand by increasing the investment in the economy.

b) "E"

TO tackle inflation the Fed sells the treasury bills and decrease the money supply and FFR in the economy.

c) "A"

COntractionary monetary policy increases the interest rate and decreases the aggregate demand and private investment.

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