The purchase and sale of government bonds by the Fed for the purpose of altering bank reserves is referred to as:
A. Open-market operations.
B. Closed-market operations.
C. Discounting.
D. Expansionary fiscal policy.
A. Open-market operations.
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If expectations are "rational," can the Fed control unemployment?
a. Yes, provided it announces policy in advance. b. Yes, if it affects the aggregate demand curve. c. No, because aggregate supply is vertical even in the short run. d. No, because only fiscal policy can affect unemployment.
The industry elasticity of demand for gadgets is ?2, while the elasticity of demand for an individual gadget manufacturer's product is ?10. Based on the Rothschild approach to measuring market power, we conclude that:
A. there is significant monopoly power in this industry. B. there is no monopoly power in this industry. C. the Herfindahl index for this industry is 5. D. the Herfindahl index for this industry is 0.2.