When the Fed sells bonds and drains reserves from the banking system, thereby reducing the supply of money, this policy will
a. decrease short-term interest rates to a greater degree than long-term interest rates.
b. decrease long-term interest rates to a greater degree than short-term interest rates.
c. increase short-term interest rates to a greater degree than long-term interest rates.
d. increase long-term interest rates to a greater degree than short-term interest rates.
C
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Suppose an MNC subsidiary buys 100 input units from its parent at a price of $2 each. It has $300 in additional production costs, and sells its 100 units of output for $6 to the MNC. It pays a 25% local profit tax
The MNC sells the output at home for $8, and its cost of producing inputs is $1 . It pays a profit tax of 20% at home on repatriated profits. What is the subsidiary net profit? Assume no selling costs at home. What is the MNC's total profit from the operation?
Which of the following instruments is NOT traded in a money market?
A) residential mortgages B) U.S. Treasury Bills C) negotiable bank certificates of deposit D) commercial paper
Which of the following most accurately describes the invisible hand concept?
a. Wise central planning by government is necessary for the efficient use of resources. b. In a democratic setting, majority rule will result in the efficient use of resources. c. In a market setting, when individuals pursue their own interests, they simultaneously tend to promote the public interest. d. In a market setting, when individuals pursue their own interests, they tend to engage in activities that lower the overall economic welfare of society.
Why is it difficult to estimate job gains or losses due to free trade agreements?
What will be an ideal response?