How does the Fed increase the level of reserves in the banking system?
A) by lowering interest rates B) by buying bonds
C) by raising interest rates D) by selling bonds
B
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The marginal propensity to consume plus the marginal propensity to invest equal one
Indicate whether the statement is true or false
If a corporation begins to suffer large losses, then the default risk on the corporate bond will
A) increase and the bond's return will become more uncertain, meaning the expected return on the corporate bond will fall. B) increase and the bond's return will become less uncertain, meaning the expected return on the corporate bond will fall. C) decrease and the bond's return will become less uncertain, meaning the expected return on the corporate bond will fall. D) decrease and the bond's return will become less uncertain, meaning the expected return on the corporate bond will rise.