When the Fed sells bonds, bank reserves increase.

Measuring the rate of inflation using a market basket that excludes food and energy prices is preferred by some analysts because this measure, called core inflation,:

A. provides a real, rather than a nominal, rate of inflation. B. gives a better measure of ongoing, sustained price changes. C. is more consistent with measures of inflation used in other countries. D. fluctuates more than measures of inflation that include food and energy prices.

Investment spending is a leakage from the circular flow model.

Answer the following statement true (T) or false (F)