If the Fed buys more bonds from the public, and increases the price it is willing to pay for the bonds, what will happen to interest rates?
A. They will rise.
B. They will fall.
C. They will remain unchanged.
D. The relationship between bond prices and interest rates is unclear.
Answer: B
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If the demand curve shifts outward and the supply curve remains the same, price will fall.
Answer the following statement true (T) or false (F)
If there is instability in the demand for commodities,
A) a monetary policy of fixed interest rates will perform better than a policy of holding the real money supply fixed. B) a countercyclical money-supply policy will cause large swings in interest rates. C) a fixed money supply policy will perform better than countercyclical changes in money supply. D) a fixed money supply policy will stabilize interest rates.
Foreign direct investment is
A) the purchase of less than 10 percent of the shares of ownership in a company in another country. B) the purchase of more than 10 percent of the shares of ownership in a company in another country. C) the diversification of purchasing shares in many companies in one country so that risk is kept to a minimum. D) the diversification of purchasing shares in one company in many countries so that risk is kept to a minimum.
Pollution is a form of market failure called a public externality
a. True b. False