This quiz is a part of the CFA Level 1 study session 'Monetary and Fiscal Policy'. 

Monetary and Fiscal Policy

The classical economists assumed that V would rise when real interest rates rise.

The classical economists concluded that increases in the money supply cause increases in real GDP and nothing else.

Increases the equilibrium rate of interest

Decreases the equilibrium rate of interest

A purchase of government securities in the open market 

A decrease in the corporate profits tax rates

Decrease reserves, and eventually lead to an expansion of the money supply.

Decrease reserves, and eventually cause a contraction of the money supply.

Increase reserves, and eventually cause a contraction of the money supply.

Higher interest rates and lower share of private sector in GDP

Higher interest rates and higher share of private sector in GDP

Lower interest rates and lower share of private sector in GDP