Define open market operations and describe how the Federal Reserve Bank uses them to control the money supply.
What will be an ideal response?
Open market operations are the buying and selling by the Federal Reserve Bank of U.S. Treasury and federal agency bonds on the open market. Securities dealers compete in these transactions to get the best deal. When the Fed buys or sells U.S. securities, it is changing the level of reserves in the banking system. When it buys securities, it adds reserves to the banking system, thereby increasing the money supply and lowering interest rates. When it sells securities, it decreases the amount of reserves in the system, thereby reducing the money supply and causing interest rate increases.
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Which of the following policies would a Keynesian expect to produce the largest decrease in income?
a. a reduction in government spending of $100 billion b. a decrease in transfer payments of $100 billion c. an increase in government spending of $100 billion d. a tax increase of $100 billion
If Valerie purchases ankle socks at $5 and gets 25 units of marginal utility from the last unit, and bandanas at $3 and gets 12 units of marginal utility from the last bandana purchased, she
A) is maximizing total utility and does not want to change her consumption of ankle socks or bandanas. B) wants to consume more ankle socks and fewer bandanas. C) wants to consume more bandanas and fewer ankle socks. D) wants to consume less of both ankle sock and bandanas.
A matrix is a network of unrelated companies trying to jointly capture economies of scale
Indicate whether the statement is true or false
What impact would easy entry have on the profitability of oligopolies?