When the central bank buys $1,000,000 worth of government bonds from the public, the money supply:
A. decreases by $1,000,000.
B. increases by more than $1,000,000.
C. increases by less than $1,000,000.
D. increases by $1,000,000.
Answer: B
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Which of the following statements about checking deposits is true?
A) It is a liability for both households and banks. B) It is an asset for both households and banks. C) It is an asset for households but a liability for a bank. D) It is a liability for households but an asset for a bank.
Continuing with the same vacation-insurance company from the preceding question, is there any vacation-day price that would both strictly increase the family's expected utility (compared to no insurance) and strictly increase the profits of the risk-neutral insurance company?
a. Yes, two days. b. Yes, three days. c. Yes, four days. d. No.
The reserve requirement is 4 percent, banks hold no excess reserves and people hold no currency. If the Fed sells $10,000 worth of bonds, what happens to the money supply?
a. it increases by $250,000 b. it increases by $200,000 c. it decreases by $200,000 d. it decreases by $250,000
From these figures we can conclude that
A. China has a comparative advantage in rice.
B. China has a comparative advantage in radios.
C. the United States has a comparative advantage in radios.
D. neither has a comparative advantage in these two goods.