When the Fed unexpectedly decreases the money supply,
a. real interest rates will rise and the foreign exchange value of the dollar will appreciate.
b. real interest rates will rise and the foreign exchange value of the dollar will depreciate.
c. real interest rates will fall and the foreign exchange value of the dollar will appreciate.
d. real interest rates will fall and the foreign exchange value of the dollar will depreciate.
A
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Which of the following are key components of a contractionary money policy?
a. Interest rates rise; equilibrium money demanded increases; decrease in aggregate demand. b. Interest rates rise; equilibrium money demanded decreases; decrease in aggregate demand. c. Interest rates fall; equilibrium money demanded increases; decrease in aggregate demand. d. Interest rates fall; equilibrium money demanded increases; increase in aggregate demand.