If the Federal Open Market Committee decides to increase the money supply, then the Federal Reserve
a. creates dollars and uses them to purchase government bonds from the public.
b. sells government bonds from its portfolio to the public.
c. creates dollars and uses them to purchase various types of stocks and bonds from the public.
d. sells various types of stocks and bonds from its portfolio to the public.
a
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In an open economy, if domestic citizens decide to save more, then the domestic real interest rate will ________ and the level of capital investment in the country will ________, holding other factors constant.
A. decrease; increase B. increase; increase C. increase; decrease D. decrease; decrease
In the IS-LM model, when government spending and taxes increase by the same amount
a. income and interest rates remain unchanged. b. interest rates and income rise. c. interest rates and income fall. d. changes in interest rates are indeterminate but income rises. e. none of the above.
A major implication of asymmetric information is that:
A. health care suppliers may reduce the supply of health care. B. health care suppliers may increase the demand for health care. C. collusion between health care suppliers and purchasers may accelerate the rise in costs. D. resources may be underallocated to the health care industry.
Total Product is
A) the change in total product resulting from an extra unit of labor, holding other factors constant. B) the ratio of output to the number of workers used to produce that output. C) the amount of output that can be produced by a given amount of labor. D) equal to the marginal product of labor when the average product is increasing.