If the FOMC orders a purchase of government securities from member banks, where does the FOMC get the money to pay for the securities?
a. It creates money to pay for the securities by adding the purchase amount to the banks' reserves.
b. It pays for the securities with new Federal Reserve notes.
c. It borrows the necessary funds from the Treasury.
d. It auctions off part of the securities it already owns.
a
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A corporate executive makes the following statement – "The company must keep hiring more workers up to the point where the marginal productivity of the last worker we hire is zero. This way we can maximize the total productivity of the firm"
Critically evaluate this statement. Also comment on whether this is the correct objective function for the firm.
If perfectly competitive industry B is currently realizing economic profits, we would expect that:
a. industry output will fall, good B will fall in price, and economic profits will tend to disappear. b. industry output will fall, good B will rise in price, and economic profits will tend to disappear. c. industry output will rise, good B will fall in price, and economic profits will tend to disappear. d. industry output will rise, good B will fall in price, and economic profits will tend to increase.