When the Fed Conducts Open Market Operations, It

question 308

Multiple Choice

When the Fed conducts open market operations, it

• A) purchases or sells government bonds issued by the U.S. Treasury.
• B) is engaging in fiscal policy.
• C) also raises taxes at the same time.
• D) shifts the demand for money curve.

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Definitions:

Invisible Hand

A metaphor coined by Adam Smith to describe how individuals pursuing their self-interest unwittingly contribute to the economic prosperity of society.

Market System

An economic approach wherein the processes of investment, manufacturing, and goods distribution are directed by supply-demand correlation, with a system that freely sets the prices of goods and services.

Prices

The amount of money required to purchase goods or services, indicating the value that consumers are willing to pay and sellers are willing to accept.

Industry

A sector of the economy that includes all businesses involved in the production or processing of goods, provision of services, or related activities.