An Open-Market Purchase of T-Bonds by the Fed Causes the Money

question 27

Multiple Choice

An open-market purchase of T-bonds by the Fed causes the money supply to

• A)fall and bond prices to fall.
• B)rise and bond prices to fall.
• C)rise and bond prices to rise.
• D)fall and bond prices to rise.

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Definitions:

Trade Deficit

A situation where a country's imports of goods and services exceed its exports, leading to more money leaving the country than coming in.

Economic Growth

Economic growth is the increase in the production of goods and services in an economy over a period, leading to a rise in the country's standard of living.

Trade Deficit

A trade deficit occurs when a country's imports exceed its exports during a given time period.

Balance of Payments

A financial statement that summarizes a country's financial transactions with the rest of the world for a specific period.