Suppose the Fed increases the money supply. As a result of this, people deposit excess funds into their bank accounts, causing banks to have excess reserves
As a result, the banks lower the interest rates that they charge on loans, and investment rises, causing an increase in aggregate spending. This is known as a(n) A) direct effect of monetary policy.
B) indirect effect of monetary policy.
C) direct effect of fiscal policy.
D) indirect effect of fiscal policy.
B
Economics
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Any event that decreases the value of the marginal product of labor will:
A. decrease labor demand. B. decrease labor supply. C. increase labor demand. D. increase labor supply.
Economics
The economy will reach equilibrium in a simple economy only if saving is
A. greater than investment. B. less than investment. C. equal to investment. D. equal to disposable income.
Economics