The Major Problem Facing the Economy Is High Unemployment and Weak

question 296

Multiple Choice

The major problem facing the economy is high unemployment and weak economic growth. The inflation rate is low and stable. Therefore, the Federal Reserve decides to pursue a policy to increase the rate of economic growth. Which policy changes by the Fed
Would tend to offset each other in trying to achieve that objective?

• A) selling government securities and raising the discount rate
• B) selling government securities and raising the reserve ratio
• C) buying government securities and raising the discount rate
• D) buying government securities and lowering the reserve ratio

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Definitions:

Citizens

Members of a particular nation or state who are recognized under the law as legal members of that nation, entitled to rights and subject to its obligations.

Specialization

Concentrating on a narrow area of expertise or production to increase efficiency and output.

Opportunity Cost

The financial impact of bypassing the subsequent top alternative during decision-making.

Trade

The exchange of goods or services between parties.