When the Fed Unexpectedly Decreases the Money Supply

question 64

Multiple Choice

When the Fed unexpectedly decreases the money supply,

• A) real interest rates will rise and the foreign exchange value of the dollar will appreciate.
• B) real interest rates will rise and the foreign exchange value of the dollar will depreciate.
• C) real interest rates will fall and the foreign exchange value of the dollar will appreciate.
• D) real interest rates will fall and the foreign exchange value of the dollar will depreciate.

---

Definitions:

Defensive Medicine

The recommendation by physicians of more tests and procedures than are warranted medically or economically as a way of protecting themselves against later malpractice suits.

Preventive Medicine

The branch of medicine focused on preventing disease and maintaining health, rather than treating illnesses after they develop.

Part-time Workers

Employees who work fewer hours than the full-time hours specified by an employer, often leading to flexible schedules.

Health Care Costs

Expenses associated with medical services, including diagnosis, treatment, and prevention of disease.