When the Federal Reserve purchases bonds from dealers, this:
a) adds liquidity to the financial system and ultimately results in the inter-bank interest rate rising
b) subtracts liquidity from the financial system and ultimately results in the inter-bank interest rate rising
c) subtracts liquidity from the financial system and ultimately results in the inter-bank interest rate falling
d) adds liquidity to the financial system and ultimately results in the inter-bank interest rate falling
Ans: d) adds liquidity to the financial system and ultimately results in the inter-bank interest rate falling
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A) ad valorem taxes. B) general property taxes. C) special excise taxes. D) special assessments.
Depreciation:
A) is not an allowance for the consumption of capital. B) is not a legitimate cash flow. C) does not act as a tax shield. D) does not consider the salvage value of an item.