Because the government has so much money, and can print more, it does not need to borrow and therefore rarely pays net interest on debt

Smart phones are becoming less expensive as new technology reduces the cost of production. In a supply and demand model, explain the effects of the technological innovations and their effect on the quantity of smart phones

What will be an ideal response?

If there is a leftward shift of the money demand curve, which of the following should the Fed do if it wants to keep output stable?

a. Lower its interest rate target b. Sell bonds in the open market c. Wait, since output usually does not change when the money demand curve shifts d. Raise its interest rate target e. Buy bonds in the open market