If the Fed wishes to reduce nominal interest rates, it must engage in an open market ________ of bonds that ________ the money supply.
A. purchase; decreases
B. sale; decreases
C. purchase; increases
D. sale; increases
Answer: C
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When market wages increase in a perfectly competitive market, then
A) the marginal factor cost increases. B) the marginal product increases. C) the marginal factor cost decreases. D) the marginal product decreases.
If marginal product is negative, total product must be negative
a. True b. False
A shift to the left by the IS curve can be achieved by all of the following, EXCEPT a(n):
A) decrease in government spending. B) increase in taxes. C) increase in the foreign interest rate. D) increase in the domestic price level.
Table 10-1 Aggregate Quantity Aggregate Quantity ? Demanded Supplied Price (billions) (billions) Level $3500 $2900 65 3400 3000 75 3350 3150 90 3250 3250 110 3100 3400 130 In Table 10-1, if full employment occurs at $3,100 billion, then
A. the economy experiences a recessionary gap of $150 billion. B. the economy experiences a recessionary gap of $300 billion. C. the economy experiences an inflationary gap of $150 billion. D. the economy experiences an inflationary gap of $300 billion.