Which of the Following Generally Occurs When a Central Bank

question 57

Multiple Choice

Which of the following generally occurs when a central bank pursues contractionary 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.

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Definitions:

Domestic Production

The total output of goods and services produced within the borders of a country.

Imported Wine

Wine that is brought into a country from abroad for sale.

Production Possibilities Curves

A graphical representation that shows the maximum possible output combinations of two goods or services an economy can achieve when its resources are fully and efficiently utilized.

Trade

The exchange of goods, services, or both between two or more parties, either within an economy or between economies.