13 Which of the following is an example of contractionary mo

13) Which of the following is an example of contractionary monetary policy?

a) An increase in the rate of required reserves.

b) Buying treasury bills.

c) Selling treasury bills.

d) a, c.

e) a, b.

14) Which of the following is true?

a) To tackle recession, the Fed buys treasury bills, thereby increases the money supply.

b) To tackle recession the Fed purchases treasury bills, thereby increases the reserves.

c) To tackle inflation the Fed buys treasury bills, thereby decreases the interest rate.

d) a and b.

e) a, b, c.

15) Which of the following is true?

a) The money multiplier is easily calculated by the Fed.

b) Monetary policy is usually not successful because the government cannot control its

expenditures.

c) Monetary policy can no longer fix the economy because the Fed cannot precisely calculate

the money multiplier.

d) None of the abov

Solution

a) \"D\"

Increase in the rate of reserve and selling the bonds are an example of an expansionary fiscal policy.

b) \"A\"

TO tackle the recession the Fed buys the treasury bills and increase the money supply in the market. Excess money in the market will lead to higher demand in the market.

c) \"D\"

None of the above-given statements are correct.