Using the Money Demand and Money Supply Model,an Open Market

question 34

Multiple Choice

Using the money demand and money supply model,an open market sale of Treasury securities by the Federal Reserve would cause the equilibrium interest rate to

• A)increase.
• B)decrease.
• C)not change.
• D)increase,then decrease.

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Definitions:

International Trade

The trading of goods and services across national borders.

Quantity Supplied

The total amount of a specific good or service that is available to consumers at a current price.

Comparative Advantage

The ability of an entity to produce a good or service at a lower opportunity cost than others, which can lead to beneficial trade.

Specialize

The process by which individuals, firms, or countries concentrate their efforts on producing a limited variety of goods or services to gain efficiency and improve performance.