1. Starting from equilibrium and holding all other factors constant, an increase in the money supply or a decrease in the demand for money will lead to _________ interest rates.
a. falling
b. surging
c. rising
d. no change in
2. When the Fed purchases U.S. treasury securities, bank reserves will
a. expand and the fed funds rate will rise.
b. contract and the fed funds rate will rise.
c. expand and the fed funds rate will fall.
d. contract and the fed funds rate will fall.