When conducting an open-market purchase, the Fed
a. buys government bonds, and in so doing increases the money supply.
b. buys government bonds, and in so doing decreases the money supply.
c. sells government bonds, and in so doing increases the money supply.
d. sells government bonds, and in so doing decreases the money supply.
a
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A reserve requirement set by the Federal Reserve is the:
A. minimum amount of currency banks must hold in their vaults. B. maximum amount of currency banks are allowed to hold in their vaults. C. minimum ratio of reserves to bank deposits that commercial banks are allowed to maintain. D. maximum ratio of reserves to bank deposits that commercial banks are allowed to maintain.
When PAE < Y the economic response for inventories should be:
A. inventories will increase. B. inventories will decrease. C. there will be no change in inventories. D. inventories should decrease initially and then sharply increase.
We can be sure that the equilibrium price will fall when: a. supply and demand both increase
b. supply and demand both decrease. c. supply increases and demand decreases. d. supply decreases and demand increases.
Leverage:
A. is synonymous with risk-free investment. B. increases expected rate of return. C. leads to smaller changes in the investment's price. D. reduces risk.