When the Fed raises the target for federal funds, it
A) sells government bonds.
B) increases the discount rate.
C) buys government bonds.
D) increases the required reserve ratio.
Ans: A) sells government bonds.
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Adam Smiths theory of the invisible hand posits the actions of independent, self-interested buyers and sellers will ________ lead to the most efficient allocation of resources.
A. never B. rarely C. often D. always
The transactions demand for money is the demand to hold money to
A) make regular, expected purchases. B) purchase bonds when interest rates increase. C) store one's wealth. D) meet unplanned expenditures.
Which of the following is most likely to occur when the marginal revenue product of capital increases? a. The price of the product in which capital is used as a resource decreases. b. The equilibrium rental rate for capital increases
c. The demand for labor as a resource increases. d. The demand curve for capital shifts to the left.
If a good is produced but not consumed, then:
a. It is not included in GDP or GNP. b. It is not included in GDP, but it is included in GNP. c. It is not included in GNP, but it is included in GDP. d. It enters into gross private domestic investment, which is a part of GDP and GNP. e. It enters into "passive consumption," which is a part of GDP in the following period.