The Central Bank of Cobra Sells Securities in an Open

question 88

Multiple Choice

The central bank of Cobra sells securities in an open market operation. In the short run, aggregate demand__________ , real GDP__________ , and the price level __________.

• A) decreases; decreases; falls
• B) does not change; decreases; rises
• C) increases; increases; rises
• D) does not change; increases; falls

---

Definitions:

Flexible Budget

A flexible budget adjusts to changes in actual revenue or activity levels, allowing for more accurate comparisons and performance assessments.

Direct Labor Costs

Expenses related to the payment of wages for employees directly involved in producing goods or providing services.

Manufacturing Overhead Costs

Indirect expenses related to the production process, such as utilities, depreciation, and salaries for factory support staff.

Return on Investment

A measure used to evaluate the efficiency or profitability of an investment, calculated by dividing the benefit (return) of an investment by the cost of the investment.