When the Fed sells government securities, it:
A. lowers the cost of borrowing from the Fed, encouraging banks to make loans to the general public.
B. raises the cost of borrowing from the Fed, discouraging banks from making loans to the general public.
C. decreases the amount of excess reserves that banks hold, discouraging them from making loans to the general public.
D. increases the amount of excess reserves that banks hold, encouraging them to make loans to the general public.
Answer: C
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School districts in which relatively more parents choose to not have their children immunized:
A. have higher rates of the diseases for which immunization is normally required. B. are in violation of federal health care regulations. C. have lower rates of the diseases for which immunization is normally required. D. tend to be in poorer neighborhoods.
Bonds differ from stocks in all of these ways except
A. a purchase of corporate stock becomes a part owner of the corporation, while a bondholder does not. B. bondholders loan money to the corporation, which has priority for repayment, while stockholders may lose their investment. C. stockholders know with a high degree of certainty how much money they will get, while bondholders do not. D. All of these responses are correct.
If the government levies a $5 tax per ticket on buyers of NFL game tickets, then the price paid by buyers of NFL game tickets would
a. increase by less than $5. b. increase by exactly $5. c. increase by more than $5. d. decrease by an indeterminate amount.
A person buys a bond with a face value of $10,000 for $9,325. Each year until the maturity date the bond buyer receives $750 from the issuer of the bond. The yield on the bond is
A) 8.04 percent. B) 7.5 percent. C) 10.0 percent. D) 6.75 percent. E) There is not enough information to answer the question.