By using open market operations, the Federal Reserve
A) adjusts the supply of reserves to keep the federal funds interest rate equal to its target.
B) controls banks' demand for reserves, thereby keeping the federal funds rate equal to its target.
C) adjusts the demand of reserves to keep bank rates in line with the federal funds rate target.
D) adjusts the supply and demand of reserves to keep the federal funds interest rate equal to its target.
E) None of the above answers is correct.
A
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The opportunity cost of a one-unit increase in an activity
A) is greater than the marginal benefit. B) is called rational cost. C) decreases as you do more of it. D) is called marginal cost. E) is measured by what the person is willing to give up to get one more unit of the activity.
A change in a person's money income changes real income and therefore changes the slope of the person's budget line
Indicate whether the statement is true or false