When the Fed Sells Securities Through Open Market Operations,the Equation

question 147

Multiple Choice

When the Fed sells securities through open market operations,the equation of exchange (under monetarist assumptions about V being stable) requires that either aggregate spending

• A)Increases or prices decrease,or both.
• B)Or prices decrease,or both.
• C)Decreases or prices increase,or both.
• D)Or prices increase,or both.

---

Definitions:

Planning Budget

A budget prepared for a specific level of activity, used as a tool for comparing actual results to see if plans and objectives are being met.

Fixed Cost

Expenses that do not change in relation to the level of goods or services produced within a certain range of activity.

Static Budget

A static budget is a fixed budget created for a specific level of activity and does not change with the actual level of activity, often used for planning purposes.

Guest-Days

A metric used in the hospitality industry, calculating the total number of guests multiplied by the number of days they stayed.