When the Fed Increases the Quantity of Money

question 89

Multiple Choice

When the Fed increases the quantity of money,

• A) the price level immediately increases.
• B) the price level is slow to change.
• C) the nominal interest rate immediately increases but the real interest rate does not change.
• D) real GDP immediately decreases.
• E) both the nominal interest rate and real interest rate immediately increase.

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Definitions:

Deposited

The act of placing money or another form of value into an account or repository.

Endorsement

The act of signing one's name on the back of a check or other negotiable instrument, which allows it to be transferred or cashed.

Payees

Individuals or entities to whom money is payable, often seen in the context of checks or promissory notes.

Negotiation

The process of discussing and arriving at a mutual agreement between parties, often involving compromise or conciliation.