Which set of actions could the Fed use to increase the money supply?
A. a reduction in the required reserve ratio and an open market purchase
B. discount rate cut and an open market sale
C. an open market sale and a reduction in the required reserve ratio
D. an open market purchase and a tax cut
Answer: A
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Figure 6-2
In Figure 6-2, the price elasticity of demand (dropping all minus signs) is ____ between P = 4 and P = 6 than between P = 10 and P = 12 because between the lower set of prices the percentage change in price is ____.
A. smaller; smaller B. smaller; greater C. greater; smaller D. greater; greater
Which of the following describes a situation in which, as the level of production of a good or service increases, the average cost of producing each individual unit decreases?
a. Arbitrage b. Economies of scale c. Privatization d. Deindustrialization
Which of the following commodity bundles represents two goods that are perfect substitutes?
a. Ink and fountain pens b. Diesel and diesel cars c. Butter and margarine d. Webcams and computers
If the quantity of loanable funds demanded exceeds the quantity of loanable funds supplied,
a. there is a surplus so interest rates will rise. b. there is a surplus so interest rates will fall. c. there is a shortage so interest rates will rise. d. there is a shortage so interest rates will fall.