When the Fed buys government securities in the open market, the money supply ________ because ________
A) decreases; banks lose liquidity, they make fewer loans and checking account deposits decrease
B) increases; banks gain liquidity, they make more loans and checking account deposits increase
C) increases; banks lose liquidity, they make more loans and checking account deposits increase
D) decreases; banks gain liquidity, they make fewer loans and checking account deposits decrease
E) none of the above
B
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Describe the prisoners' dilemma game and explain why the Nash equilibrium delivers a bad outcome for both players
What will be an ideal response?
The marginal revenue product schedule for land refers to
A. a firm's demand for land. B. the final demand for land. C. the firm's supply of land. D. the marginal physical product schedule for land.
All solutions to market failures in markets for public goods or common resources:
A. try to force the internalization of externalities. B. are not perfect, and total surplus cannot be maximized in these markets. C. need to be accepted by the affected parties to be effective. D. must be provided by the government.
The decline in the value of the dollar from 1985 to 1988 was beneficial to
A. American tourists travelling to Europe. B. firms importing goods into America. C. American exporting businesses. D. foreigners holding U.S. government bonds.