It is the responsibility of the Trading Desk at the Federal Reserve Bank of New York to implement policies in the form of
A. changes in the spread between the federal funds rate and the discount rate that are consistent with rules established by the twelve Federal Reserve bank presidents.
B. changes in foreign exchange rates that are consistent with policies established by the Secretary of the Treasury.
C. buying or selling government securities that are consistent with the FOMC Directive.
D. variations in reserve requirements that are consistent with the announcements by the Chair of the Fed's Board of Governors.
Answer: C
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A balance-of-payments surplus for the United States can be corrected by
A. Increasing quotas on foreign goods. B. Reducing tariffs on foreign goods. C. Subsidizing U.S. exports. D. Increasing U.S. taxes.
When there is a recessionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; raise; decline B. decline; lower; expand C. increase; raise; decline D. decline; lower; decline