Open market operations generally involve
A) the Fed making discount loans to depository institutions.
B) the Fed buying and selling common stock in order to affect the liquidity of the stock market.
C) the Fed buying and selling U.S. government securities.
D) private investors buying and selling securities directly on exchanges, rather than through brokers.
C
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If the income elasticity of a good is negative, then
a. the good must be a Giffen good. b. the substitution and income effects must be moving in the same direction. c. the Engel curve for this good must be downward sloping. d. the law of demand must be satisfied for this good.
A temporary increase in the price of oil would
A) increase both short-run and long-run aggregate supply. B) decrease both short-run and long-run aggregate supply. C) increase short-run aggregate supply and decrease long-run aggregate supply. D) decrease short-run aggregate supply and leave long-run aggregate supply unchanged.
The price of a new textbook increased from $60 to $75 in one year, while the price of a used textbook increased by 25 percent. What happened to the relative price of a used textbook?
A) It increased by 25 percent. B) It increased by 10 percent. C) It remained constant. D) It can't be determined without knowing the nominal price of the used textbook in at least one of the years.
In general, changes in the price level will change the:
A. real value of people's wealth and income. B. nominal value of cash balances. C. real value of consumption goods only. D. nominal value of consumption goods and the real value of durable goods.