QUESTI 10 points Save Answer If the Fed wants to sell more bonds than people are

Question

QUESTI 10 points Save Answer If the Fed wants to sell more bonds than people are willing to buy, then the Fed should: Decrease the price it charges for the bonds. Switch to another type of monetary policy tool. Encourage a government agency to buy the bonds. ORaise the price it charges for the bonds. QUESTI 10 points Save Answer Ceteris paribus, the quantity of money society is willing and able to hold decreases as precautionary demand decreases as interest rates fall increases as interest rates O decreases as the money supply increases. QUESTI 10 points Save Answer Which of the following is true about the equilibrium rate of O The Fed can change this rate by changing the money supply. It is constant. O Money demand exceeds money supply at this rate. OMoney supply exceeds money demand at this rate.

Explanation / Answer

A. Decrease the price it charges for the bonds.

If the fed wants to sell more bonds than people are willing to buy, it must reduce its price in order to attract buyers.

C. Increases as interest rates fall.

ceteris paribus, the quantities of money people are willing and able to hold increases as interest rate decreases.

A.  The Fed can change it by changing the money supply.

The fed can change the equilibrium rate of interest by altering the money supply ie. Higher money supply would mean lower rate of interest and the vice versa.

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