Open market operations occur when the government
Reduces spending
Buys and sells bonds and securities
Increases taxation
Increases the exchange rate
If there is cyclical unemployment in the economy the government might
Increase interest rates
Encourage savings
cut taxes
Reduce government spending
In a regressive tax system
The amount of tax paid increases with income
The average rate of tax decreases with more income
The average rate of tax falls as income increases
The average rate of tax is constant as income increases
A fall in interest rates is likely to
Increase aggregate demand
Increase savings
Decrease consumption
Decrease exports
The liquidity trap occurs when the demand for money
Is perfectly interest elastic
Is perfectly interest inelastic
Means that an increase in money supply leads to a fall in the interest rate
Means that an increase in the money supply leads to an increase in the interest rate
A outside shift in the demand for money other things being equal should lead to
A lower interest rate but the same quantity of money
A higher interest rate but the same quantity of money
A higher quantity of money but lower interest rates
A higher quantity of money but the same interest rate
A reduction in the money supply is likely to
Reduce the interest rate
Increase the interest rate
Increase inflation
Decrease deflation
The speculative demand for money occurs when
Individuals hold money just in case an emergency happens
Individuals hold money to buy things
Individuals hold money rather than other assets because they are worried about the price of the other assets falling
Individuals hold money to shop
