If the Fed increases its discount loans to banks, makes an open market purchase of Treasury securities, or increases its foreign exchange reserves, the impact on its balance sheet will be the same. In each case the Fed's assets and liabilities will both increase; the level of reserves increases and the monetary base expands. All three of these actions have the same effect because they all result in an increase in the reserves available to the banking system, which therefore means an increase in the base.

Whenever there is a difference in the same exchange rate offered in two markets, an arbitrageur would:

a. wait for the markets to come to equilibrium. b. buy in the market where the currency is offered at the cheaper rate,and simultaneously sell the currency where the rates are higher. c. sell the cheaper-rate currency in the home market. d. not consider the trade, since prices would undoubtedly change before it could be executed.

A private auction is an auction in which

A) individuals know their own value of the good and everyone else's valuation, too. B) individuals have their own valuation of the good but don't know everyone else's. C) many auctions are auctioned off at the same time. D) only one good is auctioned off.