To stabilize interest rates, the Federal Reserve will respond to an increase in money demand by
a. buying government bonds, which decreases the supply of money.
b. selling government bonds, which increases the supply of money.
c. buying government bonds, which increases the supply of money.
d. selling government bonds, which decreases the supply of money.
c
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A market is considered competitive if the Herfindahl-Hirschman Index (HHI) is ________ and its four-firm concentration ratio is ________
A) high; high B) high; low C) low; high D) low; low E) between 30 percent and 70 percent; greater than 5,000
Computing the CPI is important because it provides ________
A) a rough measure of the cost of living B) it is used as a benchmark in labor negotiations C) government uses it to index entitlements, such as social security benefits, so that beneficiaries do not lose purchasing power in periods of inflation D) all of the above E) none of the above
If a customer values good A at $15, and it costs the firm $10 to produce, the firm can increase its profits if
a. Redesign the product such that it delivers $16 in customer value b. Redesign the production process so that the costs fall to $9 c. One or both of the above d. None of the above
The phrase "price-taker" means
A) that market price is independent of the output of a single firm. B) each firm faces a perfectly elastic demand curve. C) that price and marginal revenue are the same. D) all of these choices.