In response to the financial crisis of 2007 and the ensuing recession, the Fed announced three rounds of quantitative easing, where the Fed purchased billions of dollars of securities.
What impact would quantitative easing have on the monetary base? A) The monetary base would increase.
B) The monetary base would decrease.
C) The monetary base would not change.
D) While the monetary base would change, it is impossible to predict in which direction.
Question 2
A higher saving rate leads to faster growth because
A) more saving produces greater additions to capital per hour of labor, raising real GDP per person.
B) capital would wear out faster.
C) people could consume more of an economy's output.
D) population growth would accelerate.
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