Decisions regarding purchases and sales of government securities by the Fed are made by the:
a. Discount Committee (DC).
b. Federal Open Market Committee (FOMC).
c. Federal Funds Committee (FFC).
d. Federal Deposit Insurance Commission (FDIC).
b
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If the Fed raises the U.S. interest rate, the demand for dollars ________ and the exchange rate ________
A) increases; rises B) increases; falls C) decreases; rises D) decreases; falls
Assume that expected inflation is based on the following: ?et = ??t-1. If ? = 0, we know that
A) a reduction in the unemployment rate will have no effect on inflation. B) low rates of unemployment will cause steadily increasing rates of inflation. C) high rates of unemployment will cause steadily declining rates of inflation. D) the Phillips curve illustrates the relationship between the level of inflation rate and the level of the unemployment rate.