If the Federal Reserve uses open-market operations to lower the interest rates on short-term U.S. government bonds, then as a consequence asset prices:
A. Increase, and the average expected rate of return on assets decreases
B. Decrease, and the average expected rate of return on assets increases
C. Increase, and the average expected rate of return on assets increases
D. Decrease, and the average expected rate of return on assets decreases
A. Increase, and the average expected rate of return on assets decreases
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If the Fed purchases federal government bonds on the open market, bank reserves will
A) decrease leading to a decrease in the money supply. B) increase leading to a decrease in the money supply. C) increase leading to an increase in the money supply. D) decrease leading to an increase in the money supply.
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