When the Fed sells government securities to a bank, how are the Fed's assets affected?
A) The amount of the Fed's government securities decreases.
B) The amount of the Fed's government securities increases.
C) The amount of reserves held at the Fed increases.
D) The amount of reserves held at the Fed decreases.
Question 2
New growth theory economists believe that:
I. Economic growth can continue as long as we keep finding new ideas.
II. The marginal product of capital diminishes very rapidly, so we must rely upon technological advances to create economic growth.
A) I only
B) II only
C) both I and II
D) neither I nor II
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