What is the principle monetary policy tool used by the Fed. Why?
What will be an ideal response?
The tool that the Fed primarily uses is open market operations. There are three reasons. First, because the Fed is the party that initiates the open market operations, it completely controls the volume. Second it can make the volume large or small, depending on how many U.S. Treasury securities it decides to buy or sell. Finally, it can implement this policy tool quickly. It does not have to change regulations and the administrative machinery is in place for it to make changes quickly.
You might also like to view...
Accounting profit minus implicit costs equals:
A. explicit costs. B. economic profit. C. fixed costs. D. total revenues.
Last year in a small economy, consumption spending was $12,000, investment spending was $3,500, government spending was $4, 000, exports were $1,150, and imports were $1,350. What was GDP for this economy last year?
What will be an ideal response?
_____ has a causal effect on _____.
A. Income; unemployment B. Height; health C. Income; consumption D. Age; wage
If an economy is represented by a point inside its production possibilities curve:
A. it can produce more of one product even if it does not produce less of another product. B. it can produce more of one product only if it produces less of another product. C. it cannot produce more of one product unless it stops producing the other product entirely. D. it cannot possibly produce more of one product, even if it produces less of another product.