If the Fed wishes to increase the money supply, it can:
A. sell a bond to bank, and take the money it receives in exchange out of circulation in the economy.
B. buy bonds from a bank, giving the bank cash in return, which it can then lend out.
C. sell a bond to a bank, and take the money it receives and lend it out to someone else.
D. buy a bond from a bank, requiring the bank to hold the money it receives as excess reserves.
B. buy bonds from a bank, giving the bank cash in return, which it can then lend out.
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What will be an ideal response?
Under fixed exchange rate, in general
A) the domestic and foreign interest rates are equal, R = R . B) R = R + (Ee - E)/E. C) the foreign and domestic interest rates are unequal. D) the expected rate of domestic currency depreciation is high. E) the expected rate of currency depreciation is one.