There are two types of open market operations: ________ open market operations are intended to change the level of reserves and the monetary base, and ________ open market operations are intended to offset movements in other factors that affect the
monetary base. A) defensive; dynamic
B) defensive; static
C) dynamic; defensive
D) dynamic; static
C
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The population of Potentia doubled within 20 years while its income per capita remained unchanged during the same period of time. This implies that ________
A) its price level doubled B) its gross domestic product also doubled C) its price level halved D) its gross domestic product remained constant
Consumer surplus exists when
A) it costs less to produce goods than buyers must pay for them. B) consumers value the good more highly than what they must pay to buy it. C) taxes on goods are less than the appropriate amount. D) the marginal benefit of the good is always equal to or less than the price of the good. E) the price of the good is greater than the marginal cost of producing a unit of the good.
Assume that the market clearing price for a shirt is $20, but that the maximum price that can be charged is $15. This is an example of
A) a price control that will lead to a surplus of shirts on the market. B) a price floor that will lead to a shortage of shirts on the market. C) markets failing to ration a fixed quantity of a good. D) a price ceiling that will likely lead to a shortage of shirts on the market.
When demand is inelastic, a decrease in price will cause
a. an increase in total revenue. b. a decrease in total revenue. c. no change in total revenue but an increase in quantity demanded. d. no change in total revenue but a decrease in quantity demanded.