When the Fed Purchases Government Bonds It _____ Reserves and ____

question 40

Multiple Choice

When the Fed purchases government bonds it _____ reserves and ____ the money supply.

• A) decreases; increases
• B) increases; decreases
• C) decreases; decreases
• D) increases; increases

---

Definitions:

Profit-maximizing Level

The output level at which a firm achieves the highest possible profit, determined where marginal cost equals marginal revenue.

Total Output

The complete quantity of goods or services produced in a specific time period by an economy or firm.

Labor Prices

The wages or compensation paid to employees for their labor or work performed.

Profit-maximizing Firm

A company that seeks to achieve the highest possible profit through its operations, focusing on revenue enhancement and cost reduction.