In Figure 15.3, the Fed can change the equilibrium interest rate from 2 percent to 6 percent by
A. Reducing the discount rate.
B. Selling bonds in the open market.
C. Decreasing the reserve requirement.
D. Buying bonds in the open market.
Answer: B
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National income is
a. the sum of all wages and salaries, interest, rent, and profits in the economy. b. equal to the money value of national output. c. the before-tax income of all individuals in the economy. d. All of the above are correct.
Government monetary authorities manipulate the supply of money in the economy primarily to:
A. Ensure high profits for commercial banks B. Provide sufficient currency to individuals and businesses to conduct their daily business C. Keep the dollar strong measured against the currencies of foreign nations D. Influence the interest rate and the levels of investment, output, and prices in the economy