Label each of the following statements true, false, or uncertain. Explain briefly. a) The term investment, as used by economists, refers to the purchase of bonds and shares of stock b) The central bank can increase the supply of money by selling bonds in the market for c) Bond prices and interest rates always move in opposite directions. d) If government spending and taxes increase by the same amount, the IS curve does not shift. e) When banks hold only a fraction of deposits in reserve, banks create money. At the end of this process of money creation, the economy is more liquid in the sense that there is more of the medium of exchange, and the economy is wealthier than before.
Label each of the following statements true, false, or uncertain. Explain briefly. a) The term investment, as used by economists, refers to the purchase of bonds and shares of stock b) The central bank can increase the supply of money by selling bonds in the market for c) Bond prices and interest rates always move in opposite directions. d) If government spending and taxes increase by the same amount, the IS curve does not shift. e) When banks hold only a fraction of deposits in reserve, banks create money. At the end of this process of money creation, the economy is more liquid in the sense that there is more of the medium of exchange, and the economy is wealthier than before.
Chapter15: Monetary Policy
Section: Chapter Questions
Problem 12QP
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Question
Label each of the following statements true, false, or uncertain. Explain briefly.
a) The term investment, as used by economists, refers to the purchase of bonds and
shares of stock
b) The central bank can increase the supply of money by selling bonds in the market
for
c)
d) If government spending and taxes increase by the same amount, the IS curve does
not shift.
e) When banks hold only a fraction of deposits in reserve, banks create money. At the
end of this process of money creation, the economy is more liquid in the sense that there
is more of the medium of exchange, and the economy is wealthier than before.
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