A reduction in the money supply is likely to
Reduce the interest rate
Increase the interest rate
Increase inflation
Decrease deflation
Open market operations occur when the government
Reduces spending
Buys and sells bonds and securities
Increases taxation
Increases the exchange rate
A fall in interest rates is likely to
Increase aggregate demand
Increase savings
Decrease consumption
Decrease exports
If the economy grows the governments budget position should automatically
Worsen
Improve
Stay the same
Decrease with inflation
The precautionary demand for money is
An idle balance
An active balance
Directly related to interest rates
Inversely related to income
