When the Fed sells bonds, the quantity of reserves in the banking system declines and the money supply decreases.

Unemployment will decrease over time if:

a. actual GDP increases faster than potential GDP. b. actual GDP increases at the same rate as potential GDP. c. acutal GDP remains the same but potential GDP increases. d. actual GDP increases at a less than proportionate rate than potential GDP. e. actual GDP decreases but potential GDP increases.

If the U.S. interest rate falls while the British interest rate remains constant, which of the following will happen in the market for pounds?

a. A rightward shift of the demand curve, a leftward shift of the supply curve, and an appreciation of the pound b. A leftward shift of the demand curve, a rightward shift of the supply curve, and an appreciation of the pound c. A leftward shift of the demand curve, a leftward shift of the supply curve, and a depreciation of the pound d. A rightward shift of the demand curve, a rightward shift of the supply curve, and an appreciation of the pound e. A leftward shift of the demand curve, a rightward shift of the supply curve, and a depreciation of the pound.