The Interest Rate Will Increase as a Result of Which

question 44

Multiple Choice

The interest rate will increase as a result of which of the following events?

• A) An open market sale of bonds by the central bank.
• B) An increase in the bond price.
• C) An open market purchase of bonds by the central bank.
• D) A decrease in income.
• E) An increase in reserves.

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Definitions:

Comparative Advantage

The ability of a country or firm to produce a particular good or service at a lower opportunity cost than its trade partners.

Opportunity Cost

The cost of foregoing the next best alternative when making a decision. It represents the benefits an individual, investor, or business misses out on when choosing one alternative over another.

Production Possibilities Frontier

A graphical representation showing the maximum quantity of two goods or services that an economy can produce when all resources are used efficiently.

Opportunity Cost

Opportunity cost is the value of the next best alternative forgone as a result of making a decision.