Which of the following increases Money Demand?

Which of the following is NOT true of the interest rate channel?

A) Bank loans play no special role. B) The Fed changes the real interest rate which affects the components of aggregate expenditures. C) Borrowers are indifferent as to how and from whom they raise funds. D) Alternative sources of funds are not substitutes for each other.

Suppose the U.S. dollar appreciates in value against the Australian dollar, and the Fed intervenes in the foreign exchange market by using U.S. dollars to buy Australian dollars. The Fed could sterilize the expansionary effect of this intervention by:

a. buying U.S. dollars in the foreign exchange market. b. buying U.S. government bonds in the domestic open market. c. selling Australian dollars in the foreign exchange market. d. selling U.S. government bonds in the domestic open market. e. buying Australian dollars in the foreign exchange market.