Quantitative easing (QE) refers to:
A. information that a central bank provides to the financial markets regarding its expected future monetary policy path.
B. a process similar to open-market sales.
C. lending of reserves by the Federal Reserve to commercial banks.
D. a process similar to open-market purchases.
Answer: D
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Use the data in the Worked Problem on p. 287 (page 699 in Economics). Calculate the change in equilibrium expenditure when investment decreases by $150 billion
What will be an ideal response?
In 2008, commercial banks' share of the U.S. credit market changed as a result of
A) commercial banks that experienced significant difficulties resulting from real estate investments applied for status as investment banks. B) investment banks that experienced significant difficulties resulting from real estate investments applied for status as commercial banks. C) increasing returns on real estate investments led commercial banks to expand. D) increasing returns on real estate investments led investment banks to expand.
If the Federal Reserve conducts an open market purchase, the
A) interest rate will not change. B) interest rate will increase. C) money supply is decreased. D) interest rate will decrease.
Suppose that reduced barriers to international financial transactions cause an increase in the economy's supply of capital. Explain, step-by-step, how the economy adjusts to arrive at a new long-run equilibrium
What will be an ideal response?