If the Fed buys U.S. Treasury securities, then this A) ...

[@Brianna17]

If the Fed buys U.S. Treasury securities, then this
 
  A) increases reserves, causes banks to reduce their loans, and increases the money supply.
  B) decreases reserves, causes banks to reduce their loans, and decreases the money supply.
  C) increases reserves, encourages banks to make more loans, and increases the money supply.
  D) decreases reserves, causes banks to reduce their loans, and increases the money supply.

Question 2

In the dynamic aggregate demand and aggregate supply model, what is the result of aggregate demand increasing slower than potential real GDP?
 
  What will be an ideal response?

[nhea]

Answer to Question 1

C

Answer to Question 2

Aggregate demand increasing slower than potential real GDP results in recession.

[@Brianna17]

Thank you

[nhea]

No problemo