If the Fed Buys a T-Bill from an Individual Rather

question 92

Multiple Choice

If the Fed buys a T-bill from an individual rather than from a bank, the effect on the money supply is

• A)smaller because there is no multiplier process.
• B)larger because of the multiplier process.
• C)the same.
• D)impossible to predict without knowing the value of the multiplier.

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Definitions:

Excess Supply

The situation in a market where the quantity of a good or service offered by producers exceeds the quantity demanded by consumers at the prevailing price.

Union Shop

A workplace where all employees must become members of a labor union within a specified period after being hired.

Negotiates

The process by which parties come together to discuss, bargain, and reach a mutually acceptable agreement.

Wage Differentials

The variations in wage rates due to factors like occupation, location, industry, and individual skills and experience.