When the Federal Reserve increases the money supply, people ...

[maychende]

When the Federal Reserve increases the money supply, people ________.
 
  A) decrease their purchases of bonds and other financial assets
  B) may, in the short run, increase their purchases of goods and services
  C) decrease the quantity of money holdings
  D) all of the above
  E) none of the above

Question 2

An increase in second-period income results in
 
  A) an increase in first-period consumption, an increase in second-period consumption, and an increase in saving.
  B) an increase in first-period consumption, a decrease in second-period consumption, and an increase in saving.
  C) a decrease in first-period consumption, an increase in second-period consumption, and an increase in saving.
  D) an increase in first-period consumption, an increase in second-period consumption, and a decrease in saving.

[irishcancer18]

Answer to Question 1

B

Answer to Question 2

D