The demand for money is given by Md = $Y (0.3 - i), where $Y = 120 and the supply of money is $30. a. What is the equilibrium interest rate? b. If the central bank wants to decrease i by 2%, at what level should it set the supply of money?

What happens when the Fed sells government bonds?

A) The money supply tends to rise. B) The money supply tends to remain unchanged. C) The money supply tends to fall. D) The U.S. budget deficit necessarily rises.

Explain why the tax multiplier is different from the government purchases multiplier, in both sign and relative magnitude

What will be an ideal response?