If the Fed sells a T-bill to a commercial bank, how will this affect the money supply?
a. It will increase the money supply.
b. It will increase bank reserves.
c. It will decrease the money supply.
d. It will have no effect on the money supply.
c
You might also like to view...
When there is an expansionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; expand B. increase; raise; decline C. decline; lower; decline D. decline; raise; decline
Assuming all excess reserves are loaned out, currency holdings by the public are zero, and a reserve ratio of 20 percent, an initial deposit of $850 will lead to total deposits of
A) $425. B) $850. C) $4,250. D) $42,500.
If Estonia has an absolute advantage in the production of two goods compared to Norway, Estonia can not benefit from trade with Norway
Indicate whether the statement is true or false
In the face of the 2007-2009 recession, the President, Congress, and the Fed
a. decided to rely on the self-correcting mechanism of the economy to eliminate inflation. b. decided to rely on the self-correcting mechanism of the economy to reduce unemployment. c. pursued an active policy to balance the budget and fight inflation. d. pursued an active policy to expand aggregate demand.