To decrease the money supply, the Federal Reserve could
A) conduct an open market sale of Treasury securities.
B) lower the discount rate.
C) raise income taxes.
D) lower the required reserve ratio.
E) raise transfer payments.
A
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What are marketable permits? Suppose there are two firms in an area, each emitting tons of sulfur. The government decides on a target level of 200 tons of sulfur, and gives each firm a permit to emit 100 tons of sulfur
Suppose Firm A is very efficient and can reduce pollution by 100 tons with an abatement cost of $500. Firm B has an older plant, so it will cost Firm B $1,000 to reduce emissions by 100 tons. What will occur with marketable permits?
Refer to Figure 27-6. In the dynamic model of AD-AS in the figure above, if the economy is at point A in year 1 and is expected to go to point B in year 2, and no fiscal or monetary policy is pursued, then at point B
A) the economy is below full employment. B) firms are operating at below capacity. C) there is pressure on wages and prices to fall. D) income and profits are falling. E) the unemployment rate is very low.
Which of the following is not considered a major player in the financial system?
A. Banks B. Savers C. Labor unions. D. Businesses
Give an example that shows price elasticity of supply. Avoid using examples from the text.
What will be an ideal response?