When the Fed buys T-bills from banks:
A. the demand for bank reserves rises.
B. the supply of T-bills rises.
C. the supply of bank reserves rises.
D. the supply of bank reserves falls.
Answer: C. the supply of bank reserves rises.
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Refer to Table 15-3. Consider the hypothetical information in the table above for potential real GDP, real GDP, and the price level in 2016 and in 2017 if the Federal Reserve does not use monetary policy
If the Fed wants to keep real GDP at its potential level in 2017, it should A) buy Treasury securities. B) decrease income taxes. C) sell Treasury securities. D) decrease the required reserve ratio.
If the demand for a good increases when the price of another good increases, then these goods are:
a. complementary in consumption. b. complementary in production. c. substitute in production. d. substitute in consumption. e. neither substitutes nor complementary.