A bond that pays a yearly interest rate of $100 is for sale. The interest rate was 10 percent and now is 5 percent. The price of the bond has
A) decreased from $1000 to $500.
B) increased from $1000 to $2000.
C) decreased from $2000 to $1000.
D) increased from $500 to $2000.
B
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Which of the following measures did the Fed take during the uncertain days following the terrorist attacks of September 11, 2001? a. The Fed tightened regulations in the financial markets
b. The Fed increased the discount rate. c. The Fed bought all the government securities up for sale. d. The Fed increased the reserve requirement ratio. e. The Fed demanded interest on the bank reserves held at the Fed.
An open market purchase of bonds by the Fed
a. drains reserves from the banking system and decreases the money supply b. injects reserves into the banking system and increases money demand c. injects reserves into the banking system and increases the money supply d. drains reserves from the banking system and increases the money supply e. injects reserves into the banking system and decreases the money supply