Answer Happy

1.. The FED has complete control over ......... but cannot
precisely control .........
(a) the money supply; the federal funds rate.
(b) the money supply; the money multiplier.
(c) the currency-deposit ratio; the money supply.
(d) the monetary base; the money supply.
2. You hear that the Fed is raising the monetary base. If banks
prefer to hold reserves
in excess of the required level,
(a) the money multiplier will decrease.
(b) the money multiplier will increase.
(c) the money supply will be more sensitive to the monetary base
change.
(d) the currency-deposit ratio will increase.
3. How does fiscal policy typically close an output gap during a
recession?
(a) Fiscal policy tries to shift the IS curve to the left reducing
taxes.
(b) Fiscal policy tries to shift the IS curve to the right by
increasing taxes.
(c) Fiscal policy tries to shift the IS curve to the left by
increasing spending.
(d) Fiscal policy tries to shift the IS curve to the right by
increasing spending