If the Fed Buys Government Securities,then

question 307

Multiple Choice

If the Fed buys government securities,then

• A)the quantity of money is not changed,just its composition.
• B)new bank reserves are created.
• C)the quantity of money decreases.
• D)bank reserves are destroyed.
• E)banks' excess reserves decrease.

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Definitions:

Aggregate Demand Curve

A graph showing the total demand for goods and services within an economy at different price levels.

Aggregate Demand

The total demand for all goods and services within an economy at various price levels, over a specific time period.

Price Level

A measure of the average prices of goods and services in an economy at a given time.

Multiplier

The factor by which changes in spending will affect the aggregate income level of an economy; often used in the context of the Keynesian economic multiplier effect.