Exhibit 15-4 -If the Fed Is Targeting the Money Supply and the Supply

question 23

Multiple Choice

Exhibit 15-4
-If the Fed is targeting the money supply and the money demand shifts from D_m to D_m' in Exhibit 15-4,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:

Access

The ability or right to approach, enter, or use something.

Limited Liability

A legal structure where a company's owners are protected from personal responsibility for its debts or liabilities.

Limited Partners

Investors in a limited partnership who are not involved in daily business operations and whose liability is limited to the amount of their investment.

Participates

To take part in or become involved in an activity or event.