The price of holding money balances is equal to the
A) price of bonds that could have been purchased with those money balances.
B) price of goods and services that could have been purchased with those money balances.
C) the interest rate that could have been earned had those money balances been invested in an interest-bearing alternative (e.g., a bond).
D) any of the above
C
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For restrictive covenants to help reduce the moral hazard problem, they must be ________ by the lender
A) monitored and enforced B) written in all capitals C) easily changed D) impossible to remove
If the Fed buys bonds in an open market operation, which of the following is most likely to occur?
a. the equilibrium level of GDP will decrease. b. the money supply will decrease. c. the aggregate demand curve will shift to the right. d. the interest rate will rise. e. the aggregate supply curve will shift to the left.