Which of the Following Generally Occurs When a Central Bank

question 52

Multiple Choice

Which of the following generally occurs when a central bank pursues expansionary monetary policy?

• A)the central bank purchases bonds and the interest rate increases.
• B)the central bank purchases bonds and the interest rate decreases.
• C)the central bank sells bonds and the interest rate increases.
• D)the central bank sells bonds and the interest rate decreases.

---

Definitions:

Marginal Utility

Marginal utility is the additional satisfaction or utility gained from consuming one more unit of a good or service.

Risk Preferences

The degree of variability in outcomes that an individual or entity is willing to accept in pursuit of a goal, often associated with investments.

Total Utility

The total satisfaction or benefit received from consuming a particular quantity of goods or services.

Risk Preferences

Individuals' or entities' varying tolerance for risk, influencing their decision-making in uncertain situations.