econ 2301 ch 12 and 13 – Flashcards
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what happens to GDP during recessions?
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Gap falls
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3 key economic fluctuations?
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co-movement, limited predictability, and persistance
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Economic shocks are amplified by what 2 things?
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downward wage rigidity and multipliers
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what happens to GDP, employment, and unemployment during economic booms?
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GDP rises, employment rises, and unemployment declines
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3 key factors that contributed to the 2008 recession?
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a collapsing housing bubble, a fall in household wealth, and a financial crisis
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is growth ever steady?
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no
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modern market economics are able to sustain long-run or short run growth?
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long-run
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economic fluctuations or business cycles
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short-run changes in the growth of GDP
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government policies can only reduce __________, and not the existence, of fluctuations?
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severity
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is the goal to be fluctuation free?
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no, it is not feasable
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economic expansions
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periods between recessions. Accordingly, an economic expansion begins at the end of a recession and continues until the state of the next recession
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since 1929, a recession has occurred once ever ____ years?
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6
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how long are the average recessions since 1929?
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1 year
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co-movement focuses on what 2 variables?
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consumption and investment both adjusted for inflation (or real investment and real consumption)
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limited predictibility
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because of the variability of lengths of recessions and expansions, we consider economic fluctuations "limited predictability" since it is hard to predict
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how long did the Great depression last?
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18 months
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limited predictability is important to acknowledge why?
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many early theories of business cycles assumed that economic fluctuations had a pendulum-like structure with systematic swings in economic growth- which is far from the truth
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what is persistence of growth rate?
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even though recession's beginning and ending may be unpredictable, economic growth is not random
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when the economy is growing, what will it probably keep growing like?
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the following quarter
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great depression
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refers to the severe contraction that started in 1929, reaching a low point for real GDP in 1933. The period of below-trend real GDP did not end until the buildup of WW2 in the late 1930s
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depression
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typically used to describe a prolonged recession with an unemployment rate of 20% or more
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what was the unemployment rate during the Great Depression?
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10%
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the US stock market crashed _____% below its peak
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80
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REAL GDP fell ______% during 1929?
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26.3
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unemployment rose ____% in 1929?
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3
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co movement shows that GDP, consumption, and investment following ________ pattern?
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the same
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unemployment rises when GDP ______?
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falls
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financial markets reflected the same co-movement pattern as ______,_______, and _________.
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GDP, investment, and consumption
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the Great Depression featured the limited predictability aspect how?
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most people thought the strength of the economy would go far beyond 1929, and the the stock market crashed...it was so sudden
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downward rigid wages cause
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unemployment
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3 sources of labor demand fluctuations
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real business cycle theory: emphasizes changing productivity and technology 2. keynesian theory: emphasizes changing expectation about the future 3. financial and monetary theories: emphasizes changes in prices and interest rates
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oakun's law
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year to yea change in the rate of unemployment is equal to -1/2 x (g-3%), where g represents the annual growth rate of real GDP, in percentage points
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better technology in Real Business Cycle Theory lead to higher household income for 3 reasons
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1. employment increases 2. wage rise 3. rising corporate earnings make the corporations' stockholders' wealthier
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technology has a hard time telling why there are regressions
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because technical regressions are unlikely the cause of recessions
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techonoligcal progress occurs in the ______run
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long
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proponents of real business cycle theory tent to also emphasize the important of changing _______ and increasing technology
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input prices
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Which of the following key factors can help explain the Great Recession of 2007dash-?2009? ?(Check all that apply?.) A. An increase in mortgage? defaults, negatively impacting banks. B. A fall in the value of the stock market. C. A fall in housing prices. D. A reduction in consumer? wealth, curtailing spending. E. An increase in inflation. F. Increased trade? protectionism, decreasing net exports. G. A reduction in new home? construction, leading to a decrease in labor demand.
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A,C,D,G
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Why is the rise in housing prices between the late 1990s and 2006 characterized as a bubble by some? economists? A. Speculators had purchased houses strictly to sell later at a higher price. B. The rate of home foreclosures increased over its? long-run average. C. The large increase in the price of housing assets did not reflect the true? long-run value of the assets. D. Houses became too expensive for ordinary people to buy.
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C. The large increase in the price of housing assets did not reflect the true? long-run value of the assets.
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How did the fall in housing prices cause the entire financial system in the United States to freeze? up? The fall in housing prices resulted in ? increased unemployment increased defaults a decrease in the money supply ?, leading to enormous ? government unemployment costs bank losses bank account closures ?, disrupting the? banks' ability and willingness to make loans to ? the government the central bank consumers and firms .
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increased defaults; bank losses; consumers and firms
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he ?Evidence-Based Economics in the chapter identifies three key factors that caused the recession of 2007dash-2009. How would? Keynes's concept of animal spirits explain the creation of a housing? bubble? A. Home builders reduced their level of construction and? investment, which led to higher prices and profits due to decreased? supply, and as inventory? declined, prices continued to climb. B. People believed that a house was a worthwhile? investment, which led to an increased demand for housing and thus pushed prices up. This confirmed to people that housing was a worthwhile? investment, which led to more? demand, resulting in an upward spiral driven by optimism. C. With an expanding? economy, real wages were driven? up, leading to higher demand for? housing, which expanded the economy further and drove up wages? again, resulting in an upward spiral driven by optimism. D. The increase in mortgage defaults led to reduced lending by? banks, which in turn reduced demand for? housing, leading to more defaults and higher prices for those who could buy as banks attempted to recoup losses.
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B. People believed that a house was a worthwhile? investment, which led to an increased demand for housing and thus pushed prices up. This confirmed to people that housing was a worthwhile? investment, which led to more? demand, resulting in an upward spiral driven by optimism.
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The national income identity shows that? ___________. A. economic fluctuations are directly related to the movement of real variables. B. nominal variables are linked to real variables through inflation. C. the growth rate of real GDP is inversely related to the unemployment rate. D. output is a function of? consumption, investment, government? spending, and net exports.
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D. output is a function of? consumption, investment, government? spending, and net exports.
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The recession of 2007-2009 affected the components of the national income identity by primarily affecting? ____________. A. all components of the national income identity equally in terms of percentage changes. B. the C and I components through a reduction in consumer wealth and a drop in housing construction. C. the G component as the government attempted to offset the fall in demand through increased spending. D. the NX component due to an appreciation of the U.S. dollar and secondarily affecting the C and I components as consumers purchased fewer imports and businesses produced fewer goods for export.
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B. the C and I components through a reduction in consumer wealth and a drop in housing construction.
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Some economists stress the role of monetary policy in the period leading up to the recession of 2007dash-2009. Between 2001 and? 2003, the Federal Reserve lowered the target federal funds rate from? 6.5% to? 1%, and kept it there through much of 2004. This resulted in a substantial decline in real interest rates throughout the? economy, including mortgage rates. Based on the? chapter's discussion of monetary and financial? factors, how could the Federal? Reserve's policies have contributed to the economic? "bubble" of the? pre-recession years of 2000dash-?2006? A. The rapid decrease in the federal funds rate led to increased consumption because of the low return on? savings, which increased demand in the economy above the sustainable level. B. The low federal funds rate also lowered the rate at which businesses could? borrow, driving an increase in demand for? investment, which in turn drove up real wages. C. The low federal funds rate also lowered mortgage? rates, driving an increase in demand for? housing, which in turn drove up real estate prices. D. The Federal? Reserve's policies increased the multipliers in the? economy, increasing the impact of the boom and therefore the subsequent crash.
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C. The low federal funds rate also lowered mortgage? rates, driving an increase in demand for? housing, which in turn drove up real estate prices.
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correct, Review Question 1 Question Help Economic fluctuations are? ____________. A. ?short-run changes in the growth of GDP. B. ?long-run changes in the growth of GDP. C. changes to the trend line of GDP growth. D. economic shocks characterized by downward wage rigidity and multipliers.
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A
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Recessions are periods in which the economy ? is stagnant expands contracts ?, while economic expansions are defined as the periods ? of peak GDP growth between booms of negative GDP growth between recessions . An economic expansion begins? ____________. A. at the midpoint between the trough and peak of GDP growth. B. after the peak of GDP growth. C. in the middle of a recession. D. at the end of a recession.
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contracts; between recessions; D. at the end of a recession ;
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In the United? States, recessions are usually defined as? ____________. A. any period of negative growth in real GDP. B. two consecutive months of negative growth in real GDP. C. two consecutive quarters of negative growth in nominal GDP. D. two consecutive quarters of negative growth in real GDP.
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D. two consecutive quarters of negative growth in real GDP.
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What does it mean to say that an economic fluctuation involves the? co-movement of many aggregate macroeconomic? variables? A. Real variables move in the same direction as the economic? fluctuation, whereas nominal variables move opposite. B. Economic fluctuations in one period lead to movement of these variables in the next period. C. These variables grow or contract together during booms and recessions. D. These variables grow during booms and contract during recessions.
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c
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The duration of an economic fluctuation? ____________. A. has limited predictability. B. is completely unpredictable. C. is predictable but only in developed economies with good data. D. is completely predictable.
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a
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Using sophisticated statistical? techniques, economists can usually predict? ____________. A. the? co-movement of macroeconomic variables. B. the end of an expansion. C. the beginning of a recession. D. the end of a recession.
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d
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Which of the following characteristics of economic fluctuations does the Great Depression? illustrate? ?(Check all that apply?.) A. ?Co-movement in economic aggregates. B. Limited predictability. C. Stock market volatility. D. Bank volatility. E. Persistence.
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A,B,E
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Go to FRED?, which shows the U.S. unemployment rate since 1948. Every recession during this period is shown by the gray bars on the graph. ?*Real-time data provided by Federal Reserve Economic Data? (FRED), Federal Reserve Bank of Saint Louis. Does the behavior of the unemployment rate illustrate the principle of? co-movement discussed in the? chapter? A. ?No, because the unemployment rate does not respond when there are booms. B. ?Yes, because when real GDP? declines, unemployment increases. C. ?Yes, because when real GDP? declines, unemployment decreases. D. ?No, because when real GDP? declines, unemployment may increase or decrease.
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B
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Economic variables are sometimes divided into? "leading indicators" and? "lagging indicators." Leading indicators are variables that start to change before an economic expansion or contraction. Lagging indicators change only when an expansion or contraction is well? underway, or even about to reverse. Based on the? graph, is unemployment a leading or lagging indicator of? recessions? A. Lagging indicator. B. Leading indicator. C. Both a leading and lagging indicator.
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A
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GDP deflator with Nominal, real, and potential real GDP equation
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Nominal/real x 100
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percent that real GDP is below real potential GDP equation
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real-potential / potential x 100
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ow do wage flexibility and downward wage rigidity affect the extent of unemployment in the economy when the demand for labor? falls? When the demand for labor? falls, the fall in employment is ? contractual limited amplified when real wages are flexible and ? amplified limited aggregated when wages are downwardly rigid.
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limited; amplified
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Real business cycle theory? ____________. A. explains how monetary factors drive business cycles. B. explains how initial economic shocks are amplified through the multiplier process. C. emphasizes the role of sentiments that create the? self-fulfilling prophecies that drive economic fluctuations. D. emphasizes the role of changing productivity and technology in causing economic fluctuations.
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D
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____________ used the concepts of animal spirits and sentiment to explain economic fluctuations. A. Arthur Cecil Pigou. B. Irving Fisher. C. John Maynard Keynes. D. Milton Friedman.
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c
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According to his theory of animal spirits and? sentiment, changes in sentiment cause economic fluctuations through? ____________. A. changes in household consumption and firm investment. Your answer is correct.B. changes in productivity. C. changes in government expenditure. D. decreases in offsetting movements in exports and imports.
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a
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The concept of multipliers was one of the key elements of John Maynard? Keynes's theory of fluctuations. A multiplier is? ____________. A. a factor that causes a change in the money supply to generate activity larger than the change in the money supply. B. a change in productivity that leads to increases in aggregate economic activity. C. an economic mechanism that causes an initial shock to be amplified by? follow-on effects. D. a change in expectations about future economic activity.
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c
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An example of a multiplier is when? ____________. ?(Check all that apply?.) A. a drop in consumer confidence reduces household? spending, causing firms to cut production and lay off? employees, leading to a greater reduction in household spending. B. a reduction in business investment is offset by increases in consumption and net exports. C. an increase in business confidence causes firms to increase production and hire? employees, leading to an increase in household? spending, causing firms to further increase production and employment. D. a decrease in labor demand with rigid wages causes a larger increase in unemployment than the same decrease with flexible wages.
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a,c
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Contractionary monetary policy can lead to an? economy-wide recession through? ____________. ?(Check all that apply?.) A. a reduction in the real interest? rate, leading to a decrease in production costs and therefore lower demand for labor. B. a reduction in the price? level, leading to a reduction in employment because of downward wage rigidity. C. an increase in the price? level, leading to a reduction in employment because of downward wage rigidity. D. an increase in the real interest? rate, leading to an increase in production costs and therefore lower demand for labor.
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b,d
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What are the important mechanisms that reverse the effects of a recession in a modern? economy? ?(Check all that apply?.) A. Labor demand increases due to expansionary government policies. B. Labor demand increases due to market forces. C. The multipliers on wages and employment return to normal. D. Labor supply increases due to an increase in real wages.
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a,b
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What market forces might cause the labor demand curve to shift back to the? right? ?(Check all that apply?.) A. The banking system recuperates and businesses are again able to use credit to finance their activities. B. Technological advances encourage firms to expand their activities. C. Wage rigidity decreases. D. Excess inventory has been sold off.
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a,b,d
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Suppose that the mythical country Moricana has a very high minimum wage. Labor market laws are trade? union-friendly and allow unions a high degree of bargaining power. Moricana is in a recessionlong dash—capacity utilization in the economy is at an? all-time low, surveys show that firms do not expect economic conditions to improve in the coming year. Firms in the country are cutting back on capital spending and investment. In? Moricana, wages are likely to be? ____________. A. flexible. B. high. C. low. D. rigid.
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d. rigid
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Assuming flexible? wages, in which case would the change in total employment be greater during a? recession: Scenario? 1: If workers do not increase their quantity of labor supplied very much in response to an increase in the wage. Scenario? 2: Workers substantially increase their quantity of labor supplied in response to an increase in the wage. A. Scenario? 1, because the labor supply curve in this case will be steeper. B. Scenario? 2, because the labor supply curve in this case will be flatter. C. Scenario? 2, because the labor supply curve in this case will be steeper. D. Scenario? 1, because the labor supply curve in this case will be flatter.
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B. Scenario? 2, because the labor supply curve in this case will be flatter.
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In? 1973, the major? oil-producing nations of the world declared an oil embargo. The price of? oil, a key source of? energy, increased. This led to widespread inflation as costs of production increased steeply. The resulting fall in GDP and employment led the United States into a recession. Which of the business cycle theories explained in the chapter would best fit this explanation of the 1970s? recession? A. Keynesian theory. B. Monetary theory. C. ?Okun's theory. D. Real business cycle theory.
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d
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The Internet boom of the? 1990's has changed all of our lives and transformed the way business is conducted. During the late? 1990's, the economy was described as the? "best of all possible? worlds" with quite high employment? (and low? unemployment). Which of the business cycle theories explained in the chapter would best explain how the Internet boom had such a positive? effect? The business cycle theory that would best explain how the Internet boom had such a positive effect is A. real business cycle theory. B. ?Okun's theory. C. Keynesian theory. D. monetary theory.
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a
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How does real business cycle theory best explain the economic? boom? A. The internet allowed the creation of new? businesses, which increased labour demand. B. Technological innovation leads to increases in? productivity, which in turn increases the marginal product of labor and therefore labour demand. C. Technological innovation leads to decreases in productivity? (because of distractions such as? Facebook), which means that firms must hire more workers to produce their? output, which in turn increases labour demand. D. Consumer and business demand for new technology products drove businesses to increase their? output, which in turn increased labour demand
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b
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An old saying? goes: "Nothing succeeds like? success." How could this saying relate to? Keynes's animal spirits view of economic? fluctuations? A. Success leads to additional success because successful people are more? productive, which leads to increases in the marginal product of? labor, allowing businesses to raise their level of investment in the economy. B. When people? succeed, they become overconfident and overly? optimistic, which can lead to actions that stimulate reckless behavior and ultimately lead to a downward spiral. C. When people? succeed, they become confident and? optimistic, which can lead to actions that stimulate further success. D. The saying? doesn't relate to? Keynes's view because individual success does not drive economic fluctuations.
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c
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How do expansionary policies differ from contractionary? policies? A. Expansionary policies seek to increase economic growth and increase? employment, while contractionary policies seek to reduce the risk of excessive price inflation. B. Expansionary policies seek to shift the labor demand curve to the? right, while contractionary policies seek to shift it to the left. C. Expansionary policies seek to reduce the severity of? recessions, while contractionary policies seek to slow down the economy when it grows too fast. D. All of the above. E. Only A and C are correct.
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d
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The former chairman of the Federal? Reserve, Alan? Greenspan, used the term? "irrational exuberance" in 1996 to describe the high levels of optimism among stock market investors at the time. Stock market indexes such as the? S;P Composite Price Index were at an? all-time high. Some commentators believed that the Fed should intervene to slow the expansion of the economy. Why would central banks want to clamp down when the economy is? growing? A. To block the formation of unsustainable speculative asset bubbles. B. To curtail excessive profits in the banking system. C. To prevent inflationary forces from gathering momentum. D. All of the above. E. A and C only.
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e. a and c
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What policies could the government and the central bank use to achieve the goal of slowing down the economic? expansion? A. The government could impose wage and price? controls, while the central bank could raise interest rates. B. The government could reduce the value of the dollar and the central bank could retire currency from circulation. C. The government could lower taxes? and/or raise? expenditures, while the central bank could lower interest rates. D. The government could raise taxes? and/or reduce? expenditures, while the central bank could raise interest rates.
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D
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According to your completed? figure, a recession impacts employment lessless severely when wages exhibit downward __________ .
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flexibility
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Quantitative easing is? ____________. A. an attempt by the central bank to more directly impact? long-term interest rates. B. a variation on the central? bank's traditional manner of conducting open market operations. C. the central? bank's purchase of? long-term bonds in the open market. D. all of the above. E. B and C only.
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d
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Central banks undertake quantitative easing programs to? ____________. A. work around the problems when? short-term nominal interest rates approach zero. B. give a boost to the prices of publicly traded equities. C. more forcefully and directly impact the interest rates relevant for investment decisions. D. all of the above. E. A and C only.
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E
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According to the Taylor? rule, the Federal Reserve should lower the federal funds rate when the? ____________. ?(Check all that apply?.) A. inflation rate falls. B. output gap fallsfalls. C. ?Fed's long-run target for the federal funds rate fallsfalls. D. ?Fed's inflation rate target risesrises. E. exchange rate risesrises.
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A,B,C,D
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Federal funds rate?
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Long-run target? + 1.5(Inflation rateminus?Inflation ?target) +? 0.5(Output gap)
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When is the output? gap, defined as the percent difference between GDP and potential? GDP, negativenegative?? A. When the economy experiences a recessiona recession. B. When actual real GDP falls belowfalls below potential GDP. C. When the? economy's capacity to produce exceedsexceeds its actual production. D. All of the above. Your answer is correct.E. A and C only.
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D
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According to the Taylor? rule, should the Fed raise or lower the federal funds rate when the output gap is negativenegative?? A. It should raiseraise the federal funds rate. B. It should lowerlower the federal funds rate. C. Gaps are? self-correcting, so it should do neither. D. It should do neither and instead let fiscal policy close the gap.
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B. It should lowerlower the federal funds rate.
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Suppose the Fed conducts an open market salesale. Such an action would be called for if the economy faced the possibility of (recession/inflation_ .
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inflation
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The? Fed's open market salesale impacts the federal funds market shown on the right by shifting the ? supply of demand for reserves.
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supply
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Following the? Fed's successful open market salesale?, the process that ensues is given by? ____________. A. ?Short-term interest rates riseriseright arrow??Long-term interest rates riseriseright arrow?Demand for goods and services decreasesdecreasesright arrow?Labor demand shifts leftleft. B. ?Long-term interest rates riseriseright arrow??Short-term interest rates riseriseright arrow?Demand for goods and services decreasesdecreasesright arrow?Labor demand shifts leftleft. C. ?Short-term interest rates fallfallright arrow??Long-term interest rates fallfallright arrow?Demand for goods and services increasesincreasesright arrow?Labor demand shifts rightright. D. ?Short-term interest rates riseriseright arrow??Long-term interest rates fallfallright arrow?Demand for goods and services increasesincreasesright arrow?Labor demand shifts leftleft.
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A. ?Short-term interest rates riseriseright arrow??Long-term interest rates riseriseright arrow?Demand for goods and services decreasesdecreasesright arrow?Labor demand shifts leftleft.
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If the current value of GDP is ?$15.1815.18 trillion and the government is planning to increase spending by ?$700700 billion? (all in one? year), the percentage increase in GDP using the multiplier estimate of the first economist is nothing percent.
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(Yr2-Yr1)/Yr1 x 100 (700
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output gap
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(GDP- trend Gap)/trend GAP
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nominal interest rate - expected inflation rate
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see if it is zero lower bound
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What are the automatic and discretionary components of fiscal? policy? A. The automatic components are those fiscal actions that require accommodation from monetary? policy, while the discretionary components do not. B. The automatic components do not require deliberate action on the part of the? government, while the discretionary components do. C. The automatic components are limited to government? expenditures, while the discretionary components entail changes in both taxes and expenditures. D. The automatic components stimulate the? economy, while the discretionary components serve purposes unrelated to the health of the overall economy.
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B. The automatic components do not require deliberate action on the part of the? government, while the discretionary components do.
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How can expansionary? expenditure-based fiscal policy lead to crowding out in the? economy? A. ?Expenditure-based fiscal policy increases the national? debt, inducing? forward-looking households and firms to reduce expenditures in anticipation of having to pay higher future taxes. B. ?Expenditure-based fiscal policy leads to more government? borrowing, absorbing funds that would have otherwise been borrowed and expended by the private sector. C. ?Expenditure-based fiscal policy requires the collection of additional? taxes, which reduce household incomes and expenditures. D. ?Expenditure-based fiscal policy raises inflation expectations and interest? rates, causing private sector expenditures to fall.
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B. ?Expenditure-based fiscal policy leads to more government? borrowing, absorbing funds that would have otherwise been borrowed and expended by the private sector.
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What could explain why a decrease in taxes could lead to a? less-than-proportionate increase in? output? A. As a result of diminishing returns to current? consumption, consumers may choose to spread the extra spending over the long term rather than consuming the proceeds of a tax cut all at once. B. Consumers may choose to save much of the tax cut in anticipation of having to pay higher taxes in the future. C. A decrease in taxes will necessitate lower government? outlays, thus largely offsetting the higher consumption expenditures of households. D. All of the above. E. A and B only.
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E. A and B only.
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In? 2005, $320 million of the federal? government's budget was allocated toward building a? "bridge to? nowhere" in Alaska that connected two small towns. In? 2006, $500,000 was allocated toward a teapot museum in North? Carolina, $1 million toward a? water-free urinal initiative in? Michigan, and? $4.5 million toward a museum and park at an abandoned mine in Maine. These projects were requested by specific legislators in order to boost their popularity in their constituencies. These types of expenditures are known as? ___________. A. pork belly spending. B. ?over-the-barrel spending. C. sunk costs. D. pork barrel spending.
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D. pork barrel spending.
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Since government spending increases employment by shifting the labor demand curve to the? right, is it always a good idea for the government to increase? expenditure? Explain your answer. A. No, continual increases in labor demand may be inflationary if they outpace labor supply growth. B. No, continual increases in government expenditures will crowd out expenditures by households and firms, very likely leaving labor demand little changed.likely leaving labor demand little changed. C. No, government efforts aimed at shifting the labor demand curve to the right should only be used during recessions.recessions. D. All of the above. E. A and C only.
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All of the above
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The Troubled Asset Relief Program? (TARP) is considered to be an example of a countercyclical policy that represents a mix of fiscal and monetary effects because it? ____________. A. provided public monies to? private, nonfinancial business enterprises. B. was a congressionally authorized expenditure by the U.S. Treasury that? sought, in? part, to provide financial resources to elements of the banking system. C. was formulated and undertaken jointly by Fed and Treasury officials. D. gave the government ownership rights in selected private banks.
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B. was a congressionally authorized expenditure by the U.S. Treasury that? sought, in? part, to provide financial resources to elements of the banking system.
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To achieve its target for the federal funds? rate, the Fed may? ____________. ?(Check all that apply?.) A. IncreaseIncrease corporate taxes. B. DecreaseDecrease lending from the discount window. C. IncreaseIncrease the reserve requirement. D. IncreaseIncrease the interest rate paid on reserves deposited at the Fed. E. SellSell Treasury bonds in the open market.
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B. DecreaseDecrease lending from the discount window. C. IncreaseIncrease the reserve requirement. D. IncreaseIncrease the interest rate paid on reserves deposited at the Fed. E. SellSell Treasury bonds in the open market.
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To achieve its target for the federal funds? rate, the Fed may? ____________. ?(Check all that apply?.) A. IncreaseIncrease corporate taxes. B. DecreaseDecrease lending from the discount window. C. IncreaseIncrease the reserve requirement. D. IncreaseIncrease the interest rate paid on reserves deposited at the Fed. E. SellSell Treasury bonds in the open market.
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B. DecreaseDecrease lending from the discount window. C. IncreaseIncrease the reserve requirement. D. IncreaseIncrease the interest rate paid on reserves deposited at the Fed. E. SellSell Treasury bonds in the open market.
