Suppose There Is a Simultaneous Central Bank Purchase of Bonds

question 66

Multiple Choice

Suppose there is a simultaneous central bank purchase of bonds and increase in taxes.We know with certainty that this combination of policies must cause

• A)an increase in the interest rate (i).
• B)a reduction in i.
• C)an increase in output (Y).
• D)a reduction in Y.

Recognize the importance of tax implications on investment decisions and calculate taxable equivalent yields.

Understand the distinctions between municipal, corporate, and government securities.

Comprehend the global aspect of financial markets, including international bonds and stock indices.

Understand the mechanisms and uses of futures contracts in financial markets.

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Definitions:

Executive Agencies

Agencies of the government responsible for the enforcement and administration of federal laws, usually under the direct control of the President or executive branch.

Executive Branch

A branch of government responsible for executing or enforcing laws, often headed by a president or prime minister.

Cabinet Departments

Major administrative units in the executive branch of the U.S. federal government, each headed by a Secretary, that advise the President and execute government policy.

Final Rules

The definitive set of regulations issued by an authority after considering public feedback on the proposed rules.