If There Is a Leftward Shift of the Money Demand

question 124

Multiple Choice

If there is a leftward shift of the money demand curve,which of the following should the Fed do if it wants to keep the price level stable?

• A) Lower its interest rate target
• B) Sell bonds in the open market
• C) Wait,since the price level does not usually change when the money demand curve shifts
• D) Raise its interest rate target
• E) Buy bonds in the open market.

---

Definitions:

Solicited Proposal

A proposal requested by an individual or organization, often in response to a specific need or project.

Letter Of Transmittal

A formal document accompanying a report or other deliverable, explaining the contents and its significance.

RFP

Request For Proposal; a document issued by an organization that outlines project requirements and asks for bids from qualified contractors or service providers.

Preschool

An educational establishment or learning environment for young children before they begin compulsory education at primary school.