Question

If the Fed decreases interest rates, other things remaining the same, foreigners demand ____ dollars thereby ____ the price of the dollar on the foreign exchange market.

Question 48 options:

1)	more; increasing.

2)	more; decreasing.

3)	fewer; increasing.

4)	fewer; decreasing.

Question 49 (2 points)

The relationship between the AS-AD model and the Phillips curve points out that as aggregate demand decreases, the unemployment rate

Question 49 options:

1)	decreases and the inflation rate rises.

2)	increases and the inflation rate falls.

3)	decreases and the price level falls.

4)	increases and the inflation rate rises.

Question 50 (2 points)

If the Fed makes an open market sale, banks reserves _____ and the supply of loanable funds ____.

1)	decrease; decreases

2)	increase; decreases

3)	decrease; increases

4)	increase; increases

Answer 1

Q48) correct option - (4) fewer, decreasing

Since the interest rate has decreased then demand for domestic currency by foreign investor will decrease which also result in decrease in price or value.

Q49)correct option - (2) increases, and the inflation rate falls.

When AD decreases, inflation decreases and the unemployment rate increases. This is because leftward movement of AD curve along AS curve which lower down the equilibrium.

Q50) correct option - (1) decreases , decreases

When fed make open market sale of government securities. Reserve of bank decreases and due to less reserve loan making ability of bank decreases.