Suppose That the Fed Makes a $100 Billion Open-Market Sale

question 186

Multiple Choice

Suppose that the Fed makes a $100 billion open-market sale of Treasury bonds, and the money multiplier is 6. Which of the following impacts are most likely to result?

• A) The money supply shifts inward, and the equilibrium interest rate rises in the money market.
• B) The money supply shifts outward, and the equilibrium interest rate falls in the money market.
• C) Investment declines, causing the aggregate demand curve to shift leftward, reducing equilibrium real GDP and thus slowing the economy.
• D) Both a. and c. are correct.
• E) Both b. and c. above are correct.

---

Definitions:

Hummingbirds

A family of small, brightly colored birds known for their rapid wingbeat, ability to hover, and preference for feeding on nectar.

Phylogenetic Species Concept

A method for classifying organisms based on the smallest group of individuals that share a common ancestor, emphasizing the evolutionary history of populations.

Evolutionary History

The sequence of events leading to the development and diversification of species through time, including their origins, relationships, and adaptations.

General Lineage Species Concept

A conceptual approach to defining species based on the idea that species are segments of population lineages that show evidence of a distinct evolutionary trajectory.