The Federal Reserve buying government bonds is considered:
a) easy money.
b) tight money.
c) expansionary monetary policy.
d) contractionary monetary policy.
Ans: c) expansionary monetary policy.
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Consumers derive consumer surplus whenever
a. the monetary value of total utility equals total expenditure b. the monetary value of total utility is greater than total expenditure c. the monetary value of total utility is less than total expenditure d. marginal utility is greater than total utility e. marginal utility is less than total utility
Assume that the central bank purchases government securities in the open market. If the nation has highly mobile international capital markets and a flexible exchange rate system, what happens to the GDP Price Index and reserve-related (central bank) transactions in the context of the Three-Sector-Model?
a. The GDP Price Index falls, and reserve-related (central bank) transactions become more negative (or less positive). b. The GDP Price Index and reserve-related (central bank) transactions remain the same. c. The GDP Price Index falls, and reserve-related (central bank) transactions remains the same. d. The GDP Price Index rises, and reserve-related (central bank) transactions become more positive (or less negative). e. The GDP Price Index rises, and reserve-related (central bank) transactions remains the same.