When the Fed Buys Bonds,it Increases the Demand for Bonds,which

question 120

Multiple Choice

When the Fed buys bonds,it increases the demand for bonds,which pushes:

• A) up the price of bonds,thus raising the interest rate.
• B) up the price of bonds,thus lowering the interest rate.
• C) down the price of bonds,thus raising the interest rate.
• D) down the price of bonds,thus lowering the interest rate.

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Definitions:

Increase in V

In economic contexts, often refers to an increase in the velocity of money, which is the rate at which money is exchanged in an economy.

Unemployment

The situation in which individuals who are capable of working and willing to work cannot find employment.

Monetarists

Economists who believe that changes in the money supply are the most significant determinants of economic growth, inflation, and unemployment rates.

Quantity Theory of Money

The Quantity Theory of Money is an economic theory that asserts the general price level of goods and services is directly proportional to the amount of money in circulation.