In the 1970s, in Response to Recessions Caused by an Increase

question 124

Multiple Choice

In the 1970s, in response to recessions caused by an increase in the price of oil, the central banks in many countries increased the money supply. How might the central banks have done this?

• A) by selling bonds on the open market, which would have raised the value of money
• B) by purchasing bonds on the open market, which would have raised the value of money
• C) by selling bonds on the open market, which would have lowered the value of money
• D) by purchasing bonds on the open market, which would have lowered the value of money

---

Definitions:

Allocation Of Resources

The process of distributing available resources among various competing needs or projects in an economy.

Five Fundamental Questions

The five fundamental questions refer to key economic questions any economy faces about what goods to produce, how to produce them, for whom to produce, how to accommodate change, and how to promote innovation.

Scarce Supply

A situation where the availability of a product or service is limited relative to the desire or demand for it.

Market System

A market economy characterized by investment, production, and distribution decisions that are influenced by the forces of supply and demand, with the prices of goods and services being established in a system where they are allowed to fluctuate freely.