If the Fed lowers the interest rate, then
A) only consumption expenditure decreases.
B) only investment decreases.
C) both consumption expenditure and investment decrease.
D) net exports will increase.
E) consumption expenditure decreases and investment increases.
D
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The money multiplier is the
A) fraction of the monetary base that is kept in currency. B) number of times that the Fed conducts open market operations in a month. C) factor by which a change in the monetary base is multiplied to give the change in the quantity of money. D) factor by which a change in the deposits base is multiplied to give the change in the monetary base. E) proportion by which a change in the quantity of money changes the monetary base.
Which of the following did NOT happen during the 2008-09 financial crisis?
A. Deposit insurance was extended to all accounts. B. The Fed quickly raised interest rates to stop the flow of easy credit. C. The Fed became the majority owner of the insurance company AIG. D. The U.S. Treasury guaranteed trillions of dollars in money market funds.