You have been hired as a Marco Economist by the President of the United States to help evaluate the recent announcement by Federal Reserve chairman Ben Bernanke that the FED will be increasing interest rates again. Ben Bernanke has justified the move on the grounds that the economy continues to be strong. Answer the following questions. Provide a graphical explanation for your answers whenever possible. 1. What is the fed trying to do? A. slow down the economy B. stimulate the economy C. remains unchanged 2. How is the fed doing it? A. buying bonds B. selling bonds C. remains unchanged 3. What happens to bond prices? A. increase B. decrease C. remains unchanged 4. What happens to the interest rate? A. increase B. decrease

You have been hired as a Marco Economist by the President of the United States to help evaluate the recent announcement by Federal Reserve chairman Ben Bernanke that the FED will be increasing interest rates again. Ben Bernanke has justified the move on the grounds that the economy continues to be strong. Answer the following questions. Provide a graphical explanation for your answers whenever possible. 1. What is the fed trying to do? A. slow down the economy B. stimulate the economy C. remains unchanged 2. How is the fed doing it? A. buying bonds B. selling bonds C. remains unchanged 3. What happens to bond prices? A. increase B. decrease C. remains unchanged 4. What happens to the interest rate? A. increase B. decrease

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter8: Macroeconomic Equilibrium: Aggregate Demand And Supply

Section: Chapter Questions

Problem 19E

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