Which of the following actions by the Fed would cause the money supply to increase?
A. Purchases of government bonds from banks.
B. An increase in the reserve requirement.
C. An increase in the discount rate.
D. Sales of government bonds to the public.
A. Purchases of government bonds from banks.
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By internal balance, most economists mean
A) full employment. B) price stability. C) full employment and price stability. D) full employment and moderate increase in prices. E) full employment and high disposable income.
In the mid-1980s, velocity "fell off the rails," growing much slower than its historical trend of 3.4 percent. Had the Fed assumed a constant growth rate of 3
4 percent and maintained a constant growth rate of money supply rather than increasing the growth rate of the money supply as it did, A) nominal GDP would have grown more slowly as would real GDP. B) nominal and real GDP would have grown more rapidly. C) nominal GDP would have grown more rapidly faster and GDP would have grown more slowly. D) real GDP would have grown more rapidly faster and nominal GDP would have grown more slowly.