When conducting an open-market sale, the Fed a. buys government bonds, and in so doing increases the money supply. b. buys government bonds, and in so doing decreases the money supply. c. sells government bonds, and in so doing increases the money supply. d. sells government bonds, and in so doing decreases the money supply
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When conducting an open-market sale, the Feda. buys government bonds, and in so doing increases the money supply.b. buys government bonds, and in so doing decreases the money supply.c. sells government bonds, and in so doing increases the money supply.d. sells government bonds, and in so doing decreases the money supply.
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- Suppose an increase in interest rates causes rising unemployment and falling output. To counter this, the Federal Reserve would a. increase government spending. b. decrease the money supply. c. decrease government spending. d. increase the money supply.When the Fed conducts open-market purchases, a. it buys Treasury securities, which decreases the money supply. b. it lends money to member banks, which decreases the money supply. c. it buys Treasury securities, which increases the money supply. d. it borrows money from member banks, which increases the money supply.#36 When conducting an open-market sale, the Fed a sells government bonds, and in so doing increases the money supply. b sells government bonds, and in so doing decreases the money supply. c buys government bonds, and in so doing decreases the money supply. d buys government bonds, and in so doing increases the money supply.
- When the Fed buys government bonds, a- the money supply decreases and the federal funds rate increases. b- the money supply decreases and the federal funds rate decreases. c- the money supply increases and the federal funds rate decreases. d- the money supply increases and the federal funds rate increases.Suppose that the Bank of Canada determines that the Canadian economy is currently overproducing. What can the Central Bank do to slow down economic activity? a. The Central bank can pursue an expansionary monetary policy by increasing the money supply, causing a decrease in the interest rate. As a result, real GDP will increase and the price level will increase. b. The Central bank can pursue a contractionary monetary policy by decreasing the money supply, causing a decrease in the interest rate. As a result, real GDP will decrease and the price level will decrease c. The Central bank can pursue a contractionary monetary policy by decreasing the money supply, causing an increase in the interest rate. As a result, real GDP will decrease and the price level will decrease. d. The Central bank can pursue a contractionary monetary policy by decreasing the money supply, causing an increase in the interest rate. As a result, real GDP will decrease and the price level will increase e. The…B. induces households to increase consumption. C. increases aggregate demand for goods and services. D. All of the above are correct. How would the Fed use open market operations (OMO) to raise interest rates? A. The Fed sells bonds to banks. B. The Fed buys bonds from banks. C. The Fed reduces the discount rate. D. The Fed sells gold certificates.
- Money supply versus interest rate targets. assume that the economy's real GDP is growing. a. What will happen to money demand over time? b. If the Fed leaves the money supply unchanged, what will happen to the interest rate over time? c. If the Fed changes the money supply to match the change in money demand, what will happen to the interest rate over time? d. What would be the effect of the policy described in part (c) on the economy's stability over the business cycle?Which of the following lists two things that both increase the money supply? a. The Fed buys bonds and raises the discount rate b. The Fed buys bonds and lowers the discount rate c. The Fed sells bonds and raises the discount rateWhich of the following will result when the Federal Reserve increases the reserve requirement? A. Banks will make fewer loans and the money supply will decrease. B. Banks will make fewer loans and the money supply will increase. C. Banks will make more loans and the money supply will increase. D. Banks will make more loans and the money supply will decrease.
- When the Fed lowers the federal funds rate target and buys bonds, what happens to short-term interest rates and the monetary base? A. short-term interest rates fall; the monetary base increases B. short-term interest rates fall; the monetary base decreases C. short-term interest rates rise; the monetary base increases D. short-term interest rates rise; the monetary base decreasesWhen conducting an open-market purchase, the Central Bank Select one: a.sells government bonds, and in so doing decreases the money supply. b.buys government bonds, and in so doing decreases the money supply. c.sells government bonds, and in so doing increases the money supply. d.buys government bonds, and in so doing increases the money supply.(c) Monetory policy authorities will respond to the change in price level that occurred in part (b). How might the central bank respond to the change you described in part (b)? (d) Draw a correctly labeled graph of the money market. a. Label the equilibrium interest rate. b. Show on your graph the change in money supply that will occur due to the monetary policy described in part (c). c. Show on your graph the change in interest rates that will occur due to the monetary policy described in part (c). (e) At the same time, assume that policymakers at the Bank of England enforce an expansionary monetary policy.