When the Fed conducts an open market sale, it
A) raises interest rates and increases the money supply.
B) raises interest rates and reduces the money supply.
C) lowers interest rates and reduces the money supply.
D) lowers interest rates and increases the money supply.
Ans: B) raises interest rates and reduces the money supply.
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The production possibilities curve for capital and consumer goods is concave to the origin because: a. of decreasing opportunity costs of production
b. resources are not perfectly adaptable to the production of both goods. c. both consumer goods and capital goods equally contribute to economic growth. d. the level of technology along the frontier is assumed to vary. e. of constant returns to scale.
The investment demand slopes downward and to the right because lower real interest rates:
A. expand consumer borrowing, making investments more profitable. B. boost expected rates of returns on investment. C. enable more investment projects to be undertaken profitably. D. create tax incentives to invest.