If the Fed buys a T-bill from a commercial bank, how will it pay for the T-bill?
A. It will give the bank new reserves.
B. It will write the bank a check.
C. It will transfer cash to the bank’s vault.
D. It will take reserves from another bank.
Answer: A
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According to the idea of consumer sovereignty, what will happen in the market for widgets if consumers decide they no longer desire widgets?
What will be an ideal response?
Describe the trends in U.S. manufacturing employment and U.S. manufacturing output over the last 40 years. What factors have contributed to these?
What will be an ideal response?
One of the tools of monetary policy is to change the discount rate. Since 2003
A) the Fed has not changed the discount rate. B) the Fed has pegged the discount rate to the reserve requirement. C) the Fed has kept the discount rate a fixed amount above the federal funds rate. D) the Fed has kept the federal funds rate one percentage point above the discount rate.
Which of the following is not a cost of inflation identified by economists?
a. menu costs associated with more frequent adjustment of prices b. confusion and inconvenience resulting from a changing value of the unit of account c. reduced price flexibility d. arbitrary redistributions of wealth associated with dollar-denominated debts