Suppose the money multiplier in the United States is 3.  Suppose further that if the Fed increases the discount rate by 1 percentage point, banks initially change their reserves by 400. To reduce the money supply by 4,200 the Fed should:

Changes in business inventories

A) are included in gross but not in net investment. B) can either be positive or negative. C) are not included in GDP because they are not sold to anyone. D) are only partly included in GDP because part of these are holdings of intermediate goods.

Suppose the interest parity condition holds and that the domestic interest rate is less than the foreign interest rate. What does this imply about the current versus future expected exchange rate? Explain

What will be an ideal response?