When the economy is at full employment and inflation is present, the government could create a surplus budget by cutting its own spending and raising taxes. The Fed would be expected to:
A. reduce the required reserve ratio, increase the discount rate, and buy securities on the open market.
B. reduce the required reserve ratio, reduce the discount rate, and sell securities on the open market.
C. reduce the required reserve ratio, reduce the discount rate, and buy securities on the open market.
D. increase the required reserve ratio, increase the discount rate, and sell securities on the open market.
Answer: D
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Molly just graduated from high school. The figure shows her possibilities frontier. If Molly goes to college, she will move from point M to point K. In terms of consumption goods, Molly's opportunity cost of going to college is
A) MK. B) OL. C) KL. D) LM.
Which of the following is LEAST likely to be a reason for firms to form a cartel?
A) to maximize profits of the cartel B) to raise competition among firms in the cartel C) to cut back output of the cartel D) to set common prices among firms in the cartel