When the Fed unexpectedly increases the money supply, it will cause an increase in aggregate demand because:
a. real interest rates will fall, stimulating business investment and consumer purchases
b. the dollar will depreciate on the foreign exchange market, leading to an increase in net exports.
c. lower interest rates will tend to increase asset prices, which increases wealth and thereby stimulates current consumption.
d. of all the above reasons.
d
Economics
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In an economy with no government or foreign sector, which of the following always holds true, ex-post?
A) Consumption equals investment. B) Velocity equals money demand. C) Saving equals consumption. D) Saving equals investment.
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A checkable deposit that pays no interest is known as a
A) demand deposit. B) certificate of deposit. C) NOW account. D) time deposit.
Economics