Open Market Operations by the Fed Lead to

question 174

Multiple Choice

Open market operations by the Fed lead to

• A) changes in the number of banks.
• B) immediate changes in aggregate supply.
• C) changes in the federal funds rate.
• D) shifts in the demand curve for reserves.

---

Definitions:

Marginal Costs

The additional cost incurred by producing one more unit of a product, which can vary as production scales.

Diseconomies of Scale

A situation where an increase in production leads to higher average costs for firms, contrary to economies of scale.

ATC

Average Total Cost, the total cost divided by the quantity of output produced; it's a measure of per-unit production cost.

MC

Short for marginal cost, it represents the change in total cost that arises when the quantity produced is incremented by one unit.