When there is a great deal of inflation the Fed will
A. sell securities on the open market.
B. buy securities on the open market.
C. both sell and buy securities on the open market.
D. not sell nor buy securities on the open market.
A. sell securities on the open market.
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In the figure above, the natural unemployment rate is
A) 6 percent. B) 0 percent. C) 8 percent. D) 4 percent. E) 2 percent.
In the short run, when the Fed raises the federal funds rate,
A) the real interest rate is unchanged so investment and consumption expenditure are not changed. B) the real interest rate temporarily falls, thereby increasing investment and consumption expenditure. C) the real interest rate temporarily increases, thereby decreasing investment and increasing consumption expenditure. D) the real interest rate temporarily increases, thereby decreasing investment and consumption expenditure. E) investment and consumption expenditure increase, thereby raising the real interest rate temporarily.