When the Fed buys government securities
A) reserves increase, leading to a decrease in the money supply by an amount more than the purchase of the government securities.
B) reserves increase, leading to a increase in the money supply by an amount more than the purchase of the government securities.
C) reserves decrease, leading to a increase in the money supply by an amount more than the purchase of the government securities.
D) reserves decrease, leading to a decrease in the money supply by an amount more than the purchase of the government securities.
Question 2
Which of the following is an example of a normative economic statement?
A) Prices rise when the government prints too much money.
B) Universal access to quality health insurance is the most important domestic policy issue of our time.
C) Interest rates rise when the government runs persistent budget deficits.
D) Extending the time in which laid-off workers are eligible to receive government unemployment compensation has increased the unemployment rate.
E) Lowering marginal income tax rates depresses consumer spending.
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American Government: Roots and Reform, AP* Edition, 12th Edition