Recall the Application. In response to the financial crisis, the Fed implemented a new policy in which it began to pay interest on deposits held at the Fed.
This move would ________ deposits held at the Fed and ________ the Fed's ability to make loans.
A) increase; decrease B) decrease; decrease C) increase; increase D) decrease; increase
Question 2
According to Okun's Law, if real GDP grows by 4 over a year, unemployment is likely to ________.
A) increase by 0.5 B) decrease by 0.5 C) decrease by 1 D) increase by 1
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