How does an open market operation change the monetary base?
What will be an ideal response?
The monetary base is the sum of coins, Federal Reserve notes, and depository institution deposits at the Federal Reserve, that is, banks' reserves. When the Federal Reserve conducts an open market operation, it either buys securities and pays for them with newly created reserves or it sells securities and is paid with reserves held by banks. In both cases the monetary base changes. In the first case, when the Fed buys securities, the monetary base increases. In the second case, when the Fed sells securities, the monetary base decreases.
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What effect does an increase in the nominal interest rate have on the opportunity cost of holding money and on the demand for money curve?
What will be an ideal response?
With a technological change that increases productivity, the average product curve ________ and the marginal product curve ________
A) shifts upward; is unchanged B) is unchanged; is unchanged C) is unchanged; shifts upward D) shifts upward; shifts upward