Use the Following to Answer Questions

question 1

Multiple Choice

Use the following to answer questions .
Exhibit: Effects of Monetary Policy
-(Exhibit: Effects of Monetary Policy) If the Fed acts to close the output gap in Panel (a) , it would

• A) sell government bonds which will lead to the shift in demand for bonds in Panel (b). This action will raise the price of bonds and lower the interest rate.
• B) buy government bonds which will lead to the shift in demand for bonds in Panel (b). This action will raise the price of bonds and increase the interest rate.
• C) buy government bonds which will lead to the shift in demand for bonds in Panel (b). This action will raise the price of bonds and lower the interest rate.
• D) sell government bonds which will lead to the shift in demand for bonds in Panel (b). This action will raise the price of bonds and increase the interest rate.

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Definitions:

Responsibility Accounting System

An accounting system that measures the results of each responsibility center and relates them to managers responsible for those centers.

Controllable Costs

Expenses that can be modified or managed by a decision-maker within an organization, including costs like supplies and advertising.

Managerial Level

Refers to the different layers of management within an organization, each level with specific responsibilities for various aspects of the business's operations.

Manufacturing Companies

Businesses involved in the transformation of goods, materials, or substances into new products through processes and operations.