The Fed relies on open-market operations, which work
A. with the Treasury in creating money to finance bonds.
B. through major stock exchanges to influence bond prices.
C. directly through the nonbank public to change their assets.
D. through the banking system by affecting their reserves.
Answer: D
You might also like to view...
Figure 11-1
?
In Figure 11-1, to reach the level of potential GDP, the administration of President Obama would most likely advocate
A. increasing Social Security payments. B. decreasing defense spending. C. decreasing personal income taxes. D. All of the above are correct.
The quantity sold in a market will decrease if the government decreases a
a. binding price floor in that market. b. binding price ceiling in that market. c. tax on the good sold in that market. d. All of the above are correct.
Refer to the diagram relating to short-run and long-run aggregate supply. The:
A. short-run aggregate supply curve is A.
B. short-run aggregate supply curve is B.
C. long-run aggregate supply curve is B.
D. long-run aggregate supply curve is D.
Suppose the Fed pursues a policy that leads to higher interest rates in the United States. How will this policy affect real GDP in the short run if the United States is an open economy? This policy
A) reduces investment spending and consumption spending, both of which reduce GDP. Net exports fall which increases GDP. B) increases investment spending, consumption spending, and net exports, all of which increase GDP. C) reduces investment spending and consumption spending, both of which reduce GDP. Net exports rise which increases GDP. D) reduces investment spending, consumption spending and net exports, all of which reduce GDP.