An open market sale of U.S. Treasury securities by the Fed will cause the Banking System's balance sheet to show:
A. no net change in assets or liabilities, only a change in the composition of assets with securities increasing and reserves decreasing.
B. only an increase in liabilities.
C. no net change in assets or liabilities, only a change in the composition of assets with securities decreasing and reserves increasing.
D. only a decrease in assets.
Answer: A
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Which of the following would be an appropriate discretionary fiscal policy to use when the economy is in a recession?
a. Increased government spending. b. Higher taxes. c. A balanced-budget reduction in both spending and taxes. d. An expansion in the money supply.
Which of the following is an important factor in exchange rate movements in the very short run?
a. Changes in relative GDPs. b. Changes in relative tastes for foreign goods. c. Changes in relative interest rates. d. Changes in inflation. e. None of the above.