How does the Federal Reserve inject reserves into the banking system?
A. By moving reserves between the accounts of different banks
B. By creating new money it uses to buy financial assets
C. By creating new money it lends directly to households and businesses
D. By creating new financial assets it sells in the open market
Ans: B. By creating new money it uses to buy financial assets
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According to the circular flow, the value of total output produced and total income
A) will be equal. B) should increase by the unanticipated rate of inflation. C) should differ by the value of intermediate goods. D) will always be increasing in a capitalist economy.
The figure above shows the relationship between the journey length and the cost of trip per mile. The curve becomes flatter because as the journey length increases,
A) the cost per mile increases. B) the fall in the cost per mile becomes greater. C) the cost per mile remains unchanged. D) the cost per mile decreases. E) the fall in the cost per mile becomes smaller.