Exhibit 16-6 -If the Fed Is Targeting the Money Supply and the Supply

question 170

Multiple Choice

Exhibit 16-6
-If the Fed is targeting the money supply and the money demand shifts from D_m to D_m' in Exhibit 16-6, the Fed will

• A)do nothing and the interest rate will rise to i'
• B)do nothing and the interest rate will settle at i
• C)decrease the money supply to restore its target of i
• D)increase the money supply to restore its target of i
• E)decrease money demand back to D_m to restore its target of i

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Definitions:

Federal Government

The national government of a federation of states, which holds the authority to govern issues that affect the entire country.

Fine Motor Skills

The ability to make movements using the small muscles in our hands and wrists, crucial for tasks like writing, buttoning, and cutting.

Puzzle

A problem or toy designed to test ingenuity or knowledge, requiring a solution by thinking or experimentation.

Susceptibility

The degree to which an individual is prone or likely to be affected by a particular condition, disease, or influence.