- the Economy Is at the Equilibrium Shown at Point a Point

question 65

Multiple Choice

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The economy is at the equilibrium shown at point a in the above figure. If the Fed

• A)buys government securities, the economy moves to an equilibrium at point b.
• B)sells government securities, the economy moves to an equilibrium at point b.
• C)sells government securities, the economy moves to an equilibrium at point c.
• D)buys government securities, the economy moves to an equilibrium at point c.
• E)None of the above are correct because the economy will remain at point a if the Fed buys or if the Fed sells government securities.

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Definitions:

Possession

The state of having, owning, or controlling something, legally or factually.

Carrier

A business that undertakes to transport persons, goods, or both.

Right to Inspect

The authorized capacity to examine or review something for accuracy, quality, or condition.

Goods

Items that are manufactured or produced for sale.