Author Question: Suppose individuals expect that interest rates will increase in the future. Also assume that the Fed ... (Read 125 times)

Zoey63294 · **on:** Jun 30, 2018

Suppose individuals expect that interest rates will increase in the future. Also assume that the Fed wants to prevent any change in current output. Given this goal of the Fed, the Fed should implement a policy in the current period that

A) shifts the IS curve rightward.
B) shifts the IS curve leftward.
C) shifts the IS curve leftward and the LM curve upward.
D) shifts the LM curve upward.
E) shifts the LM curve downward.

Question 2

Holding large amounts of bank capital helps prevent bank failures because

A) it means that the bank has a higher income.
B) it makes loans easier to sell.
C) it can be used to absorb the losses resulting from bad loans.
D) it makes it easier to call in loans.