What are open market operations? If the economy is experiencing a recession, what kind of open market operations should the Fed undertake?
What will be an ideal response?
When the Fed buys or sells government bonds from/to private banks in exchange of reserves held by those private banks at the Fed, it is referred to as an open market operation. When an economy is going through a recession, the Fed should buy government bonds from private banks to stimulate the economy.
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Disposable personal income equals personal income
A) minus personal tax payments plus government transfer payments. B) plus government transfer payments. C) minus personal tax payments. D) minus government transfer payments plus personal tax payments.
A movement upward along an upward sloping Engel curve corresponds to
A) upward sloping indifference curves. B) crossing indifference curves. C) a rotation in the budget constraint. D) a parallel shift in the budget constraint.
A consumption tax is usually collected on
a. wages and salaries. b. interest income. c. dividend income. d. None of these.
Which of the following activities is not counted in our calculations of GDP?
a. the purchase of a hammer for household repairs b. the labor services of a volunteer group building a home for a poor widow c. the purchase of new, domestically-produced tires for your old foreign car d. a haircut received and paid for at a beauty salon