A construction boom occurs and many of the new buildings need ...

[DelorasTo]

A construction boom occurs and many of the new buildings need plywood for their framing. Which of the figures above best illustrates this change?
 
  A) Figure A
  B) Figure B
  C) Figure C
  D) Figure D
  E) Figure A or Figure C

Question 2

Describe the channels through which open market purchases by the Fed affects output in an open economy.
 
  What will be an ideal response?

[popopong]

Answer to Question 1

A

Answer to Question 2

Open market purchases lead to an increase in money supply. As a result, interest rates decrease, which not only leads to increased investment but also depreciates the exchange rate and raises net exports. The higher levels of net exports, in addition to the higher levels of investment, result in higher output levels.