Repurchase Agreements Are Purchased by the Fed to

question 36

Multiple Choice

Repurchase agreements are purchased by the Fed to

• A) temporarily decrease the aggregate level of bank funds.
• B) permanently increase the aggregate level of bank funds.
• C) permanently decrease the aggregate level of bank funds.
• D) temporarily increase the aggregate level of bank funds.

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Definitions:

Expansionary Fiscal Policy

A government policy aimed at stimulating economic growth by increasing public spending, cutting taxes, or both, to boost aggregate demand.

Equilibrium Price Level

The cost at which the amount of products offered matches the amount of products requested.

Equilibrium Output

The level of production at which the quantity of goods produced equals the quantity of goods demanded.

Keynesian Approach

An economic theory proposing that government intervention through fiscal policies (spending and taxes) can affect the overall level of economic activity, stabilizing the economy.