In the figure above, what happens if the Fed increases the quantity of money by 8 percent?
A) The interest rate rises to 1.08.
B) The value of money rises to 1.08.
C) The value of money falls to 0.92 and there is a movement downward along the LRMD.
D) The LRMD curve shifts rightward to restore equilibrium.
E) The price level falls to 1.08.
C
Economics
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Explain the 1992 crisis that led to the breakdown of the European Union's Exchange Rate Mechanism. What disadvantages of exchange-rate targeting were exhibited during this crisis?
What will be an ideal response?
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If net taxes are included in the model, the equation that shows consumption at each level of income is: C = a + b(Y - T) or C = a + bY - bT
a. True b. False
Economics