The Initial Impact of the Fedʹs Open Market Sale of Government

question 31

Multiple Choice

The initial impact of the Fedʹs open market sale of government securities to banks is

• A) an increase in the quantity of money by some multiple of the dollar volume of the sale.
• B) a decrease of the banking systemʹs reserve deposits at the Fed.
• C) a decrease in the quantity of money by some multiple of the dollar volume of the sale.
• D) an increase in bank deposits at the Fed.

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Definitions:

Total Product Curve

A graphic representation showing how the total quantity of output of a firm changes as the quantity of an input is changed, holding all other inputs constant.

Marginal Product

The increase in output that results from adding one more unit of a specific input, holding all other inputs constant.

Total Product

The total output or production achieved by a firm from a given amount of inputs.

Marginal Product

The additional output produced when one additional unit of an input is employed, with all other factors remaining constant.