-In the Above Figure, the Economy Is Initially at Point

question 23

Multiple Choice

-In the above figure, the economy is initially at point B. If the Fed decreases the quantity of money, there is

• A) a movement to point C.
• B) a movement to point A.
• C) a shift to AD2.
• D) a shift to AD1.

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Definitions:

Spread

The difference between the buy and sell price for a currency.

Foreign Exchange Trade

The act of buying and selling currencies with the aim of making a profit from the changes in their exchange rates.

Buy and Sell Price

The price at which an item can be purchased and the price at which it can be sold, respectively.

Commercial Bank

A financial institution that offers a broad range of deposit accounts, including checking and savings, and extends loans to individuals and businesses.