In the above figure, suppose the economy is initially at point a. If the nominal interest rate increases, there is a movement to point such as

Which of the following best describes a steady state?

A) Political stability is maintained by the state. B) The standard of living is increasing at a stable rate. C) Each firm in the economy receives a steady stream of income. D) Output per worker, consumption per worker, and capital per worker are constant.

Assuming an decrease in money demand, then to keep interest rates constant the Fed must

a. keep the money supply constant. b. conduct an open market sale of bonds. c. reduce the required ratio. d. both b and c. e. None of the above