When the Fed buys a U.S. bond in the open market
A) its action contracts total reserves and the money supply.
B) total reserves increase by the amount of the purchase but the money supply stays the same.
C) its action expands total reserves and the money supply.
D) its action has no effect on the total reserves or the money supply because the check it writes increases reserves at one bank but they fall at another.
C
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Which of the following is a component of the M1 money supply?
A) Mutual funds B) Stock investments C) Three month T-bills D) All of the above are part of M1. E) None of the above is part of M1.
A relatively flat aggregate demand curve indicates that
A) velocity is relatively constant. B) the economy is near full employment. C) inflation is relatively low. D) spending is sensitive to changes in the price level.
The "rules of the game," the set of conditions that shape individual incentives and constraints, are determined by
a. the production possibilities frontier b. scarcity c. technology d. the amount of consumer goods in the economy e. laws about resource ownership and the role of government
Graphically, to find the profit-maximizing price for a monopoly, find the output level where MC = MR and draw a line from that output level vertically to the demand curve
Indicate whether the statement is true or false