When a central bank sells bonds, cash reserves throughout the financial system increase, interest rates fall, and investment spending increases
Indicate whether the statement is true or false
FALSE
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Explain absolute advantage
What will be an ideal response?
In the monopolistic competition model, the attribute of free entry suggests that: a. all firms earn zero economic profits in the long run
b. some firms will be able to earn economic profits in the long run. c. some firms will be forced to incur economic losses in the long run. d. the market structure will eventually be characterized by perfect competition in the long run.
In the short-run, if the Federal Reserve increases interest rates, then consumption and investment ________, aggregate expenditure ________, and short-run equilibrium output ________.
A. increase; decreases; decreases B. increase; increases; increases C. decrease; decreases; decreases D. increase; increases decreases
Turning points in business cycles occur when
A. a new business cycle is initiated at the trough. B. the business cycle begins to follow a new pattern that differs from previous business cycles. C. the economy hits the peak or trough in the business cycle. D. a new business cycle is initiated at the peak.