Explain what happens to the money supply, interest rates, investment spending and GDP when the Fed makes open market bond purchases
What will be an ideal response?
When the Fed purchases bonds in the open market, they transfer money to the market, so the money supply increases. When the money supply increases, money becomes less expensive to obtain, which means interest rates are lower. Lower interest rates will encourage more investment spending, and when investment spending increases, GDP will increase.
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Why is a discounted airline fare a price discrimination that can be offered?
(A) Because people who fly on business want the price discounts but do not qualify. (B) Because senior citizens qualify for discounts on certain types of flights but not on others. (C) Because people do not necessarily want to go where the discounts will allow them to go. (D) Because vacationers are willing to put up with the restrictions that the airlines impose.
As a real estate agent, Krista Otavi prides herself on her good training, availability to clients, and hard work to make a sale. Which one of the basic ways of product differentiation does Krista emphasize?
a. services b. product image c. location d. commission rate e. physical differences