Author Question: If the Fed carries out an open market operation and sells U.S. government securities, the federal ... (Read 47 times)

Arii_bell · **on:** Jun 29, 2018

If the Fed carries out an open market operation and sells U.S. government securities, the federal funds rate ________ and the quantity of reserves ________.

A) falls; decreases
B) rises; increases
C) rises; decreases
D) rises; does not change
E) falls; increases

Question 2

The crowding-out effect describes how a government budget ________ ________ the real interest rate and thereby ________ equilibrium investment.

A) surplus; raises; decreases
B) surplus; lowers; decreases
C) deficit; lowers; decreases
D) deficit; lowers; increases
E) deficit; raises; decreases