If the Fed wishes to increase the money supply, it can:
A. buy a bond from a bank, requiring the bank to hold the money it receives as excess reserves.
B. buy bonds from a bank, giving the bank cash in return, which it can then lend out.
C. sell a bond to bank, and take the money it receives in exchange out of circulation in the economy.
D. sell a bond to a bank, and take the money it receives and lend it out to someone else.
Answer: B
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The demand and supply schedules for pizza are in the table above. A price ceiling of $4 per slice results in
A) a surplus of 20 slices of pizza. B) a shortage of 20 slices of pizza. C) a shortage of 40 slices of pizza. D) a shortage of 60 slices of pizza. E) neither a shortage nor a surplus.
As a result of the recent financial crisis, some analysts believed that the MPC in the U.S. declined. If this is true, the value of the multiplier is now
A. smaller. B. larger. C. the same. D. magnified to a larger amount.
Money allows people to specialize in what they do best, thereby raising everyone's standard of living
a. True b. False Indicate whether the statement is true or false
If labor in Mexico is less productive than labor in the United States in all areas of production,
a. then neither nation can benefit from trade. b. then Mexico can benefit from trade but the United States cannot. c. then the United States will have a comparative advantage relative to Mexico in the production of all goods. d. then both Mexico and the United States still can benefit from trade.