Does an open market operation in which the Fed buys securities from the general public decrease or increase the banking system's reserves?
What will be an ideal response?
An open market purchase of government securities by the Fed increases the banking system's reserves.
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The purchase of a computer by a person for household use would be counted in what category of GDP?
A. The purchase is included as part of investment. B. The purchase is not included in GDP at all, but the value of services the computer gives is included in consumption each year. C. The purchase is counted as consumption if the computer was manufactured in the United States; otherwise, it is ignored. D. The purchase is always counted as consumption.
The ________ the down payment made by a borrower when taking out a mortgage, the ________
A) lower; lower the interest rate usually charged by the financial company issuing the mortgage B) lower; more highly leveraged that borrower is on the mortgage C) higher; more likely the mortgage-issuer will be faced with a mortgage default. D) higher; greater the risk that the borrower will find herself upside down on the mortgage
If unemployment is a problem, the Fed could ______ bonds and ______ the reserve requirement.
A. buy; increase B. buy; decrease C. sell; increase D. sell; decrease
Equilibrium price and quantity are determined by:
A. supply. B. both supply and demand. C. government regulations. D. demand.