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Author Question: An open market _______ of 100 million of securities ______. A. purchase; increases bank reserves ... (Read 90 times)

SO00

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on: Jun 29, 2018
An open market _______ of 100 million of securities ______.
 
  A. purchase; increases bank reserves
  B. sale; increases bank reserves
  C. purchase; decreases the Fed's liabilities
  D. sale; increases the Fed's liabilities

Question 2

Refer to Figure 5-3. The efficient output level is
 
  A) Qo. B) Qo - Qm. C) Qm. D) Qn.


TheDev123

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Reply #1 on: Jun 29, 2018
Answer to Question 1

A When the Fed purchases government securities, it effectively pays for (at least part of) the purchasing by increasing banks' reserves.

Answer to Question 2

D


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