If the Fed buys government securities, then
A) the quantity of money is not changed, just its composition.
B) new bank reserves are created.
C) the quantity of money decreases.
D) bank reserves are destroyed.
E) banks' excess reserves decrease.
B
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Consider two goods-one that generates external benefits and another that generates external costs. A competitive market economy would tend to produce: a. too much of both goods, relative to the social optimum
b. too little of both goods, relative to the social optimum. c. too much of the good that generates external benefits relative to the social optimum, and too little of the good that generates external costs. d. too little of the good that generates external benefits relative to the social optimum, and too much of the good that generates external costs.
Which of the following is an example of a way in which an oligopolistic firm can escape the prisoner's dilemma?
A) producing more of its product B) advertising that it will match its rival's price C) reneging on a previous tacit agreement with rival firms to charge identical high prices D) ignoring the pricing decisions of the other firms