New tools of monetary policy created in 2008 included
A. Fed purchase of corporate paper and a new discount window for investment banks.
B. open market purchases and sales of short-term U.S. government securities.
C. restoration of individual income tax rates to their pre-2001 levels.
D. elimination of the requirement that banks hold reserves against deposits.
Answer: A
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Explain how expansionary and contractionary monetary policies affect aggregate demand through the exchange rate channel
What will be an ideal response?
During a recession, unemployment insurance ensures that:
a. the disposable income of those who are unemployed will increase above the usual level. b. disposable income does not fall by as much as GDP decreases c. disposable income increases as GDP falls. d. the marginal propensity to consume increases. e. the marginal propensity to consume decreases.