Each question welghs equaly and the total will be counted out of 100 Page 10 out

Question

Each question welghs equaly and the total will be counted out of 100 Page 10 out of 17 The graph below shows the money market. Interest rate, i MS MD Quantity of money 46) Which of the following involves the buying and selling of Treasury bills? a) Discount policy b) Reserve c Open market operations d) All of the above 4h) (MP-p) What happens in the money market if the Federal Reserve Bank buys U.S. Treasury bills? a) Money demand decreases b) Money supply decreases c) Money demand increases d) Money supply increases 48) [MPe] If the Federal Reserve sells $200 million worth of US Treasury bills to the public, the interest rate a) decrease b) stay the same C increase 49) How does an increase in the price level affect the money market? a) Money demand shifts to the left b) Money demand shifts to the right Money supply shifts to the left Money supply shifts to the right 0 MPe How does ellag Treasur bl y the Fedena reserve afet age in the economy? a) ) it decreases consumption, investment, and net exports it increases consumption, investment, and net exports government purchases, investment and net exports government purchases, investment and net exports does not impact aggregate demand What happens to money supply if the Central Bank increases the bank reserve requirements? a) Money supply will increase by less than it otherwise would b) Money supply will increase by more than it otherwise would c) Nothing, bank reserve requirements do not affect money supply.

Explanation / Answer

46. C.

Explanation: The Federal Open Market Committee conducts open market operations through buying and selling treasury bills to control the money supply.

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