The Tools at the Disposal of the Fed for Changing

question 509

Multiple Choice

The tools at the disposal of the Fed for changing the quantity of money do NOT include

• A) changing discount rates.
• B) changing the required reserve ratio.
• C) increasing the number of commercial banks.
• D) open market operations.

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Definitions:

Supply Shift

A movement of the supply curve to the left or right, indicating a change in the quantity supplied at each price, usually in response to a change in determinants other than price.

Total Surplus

The sum of consumer and producer surplus, representing the total net benefit to society from the production and consumption of goods or services.

Consumer Surplus

The discrepancy between the total price consumers are ready to pay for a good or service and what they actually pay for it.

Producer Surplus

The disparity between the price at which sellers are prepared to offer a product and the actual selling price they get.