Illustrate the effect of the Fed purchasing $50 million worth of mortgage-backed securities on the Fed's balance sheet
What will be an ideal response?
The Fed's assets increase as it acquires $50 million worth of securities and its liabilities increase by $50 million due to an increase in reserves.
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The table above gives the quantity of money and money demand schedules. Suppose that the interest rate is equal to 3 percent. The effect of this interest rate in the money market is that
A) the money market is in equilibrium. B) people buy bonds and the interest rate falls. C) people sell bonds and the interest rate rises. D) bond prices rise so that the interest rate rises.
Northeastern farmers responded to increasing western competition in the 1800s by
a. reducing grain cultivation. b. increasing production of dairy products. c. growing hay to feed city horses. d. moving to the city or the West. e. All of the above.