When the Fed conducts open market operations, it
A. also raises taxes at the same time.
B. is engaging in fiscal policy.
C. shifts the demand for money curve.
D. purchases or sells government bonds issued by the U.S. Treasury.
Answer: D
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When the Fed conducts open market operations, it
A) is engaging in fiscal policy. B) purchases or sells government bonds issued by the U.S. Treasury. C) shifts the demand for money curve. D) also raises taxes at the same time.
In the long run, a year-long drought that destroys most of the summer's wheat crops causes permanently:
A. higher prices. B. lower prices. C. lower output. D. None of these is true.
Flexible exchange rates occur when
A) speculators bet that a currency will soon depreciate. B) governments and central banks spend foreign exchange to prop an exchange rate at a certain level. C) no one knows the true value of a currency. D) exchange rates are determined by forces of supply and demand.
The key characteristics of a monopolistically competitive market structure include
A) few sellers. B) sellers selling similar but differentiated products. C) high barriers to entry. D) sellers acting to maximize revenue.