Answer Happy

Q5. (5pts) If the real return on government bonds is 3 percents and the expected rate of inflation is 4 percents, then the cost of holding money is percent. (a) 1 (b) 3 (c) 4 (d) 7

Q2. (5pts) Suppose the Fed makes an open market sales of $4 million. Assume that the money multiplier equals 2. What is the change in the money supply? (a) The money supply has increased by $2 million. (b) The money supply has increased by $8 million. (c) The money supply has decreased by $2 million. (d) The money supply has decreased by $8 million.