Open market operations occur when the government
Reduces spending
Buys and sells bonds and securities
Increases taxation
Increases the exchange rate
A reduction in the money supply is likely to
Reduce the interest rate
Increase the interest rate
Increase inflation
Decrease deflation
If there is cyclical unemployment in the economy the government might
Increase interest rates
Encourage savings
cut taxes
Reduce government spending
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
A fall in interest rates is likely to
Increase aggregate demand
Increase savings
Decrease consumption
Decrease exports
