Exhibit 15-6 -If the Federal Reserve Is Targeting the Money Supply When

question 27

Multiple Choice

Exhibit 15-6
-If the Federal Reserve is targeting the money supply when the demand for money decreases,their proper response is to

• A)decrease the money supply
• B)keep the money supply on a path of constant,predictable growth
• C)increase the money supply to match the increase in the demand for money
• D)stimulate inflation to increase the demand for money
• E)stimulate a decrease in the price level to increase the demand for money

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Definitions:

Sign Test

A nonparametric test used to determine if there is a difference between matched or paired observations.

Distribution

Refers to the way in which data points are spread out across the range of possible values in a dataset.

Test Statistic

A computed value used to decide whether to reject the null hypothesis in statistical hypothesis testing.

P-Value

The probability of obtaining test results at least as extreme as the results actually observed, under the assumption that the null hypothesis is correct.