The Appropriate Monetary Policy in the Event of a Recessionary

question 203

Multiple Choice

The appropriate monetary policy in the event of a recessionary gap would be to

• A) increase the difference between the discount rate and the federal funds rate.
• B) engage in an open market purchase of U.S. government securities.
• C) increase the difference between the federal funds rate and the required reserve ratio.
• D) raise the required reserve ratio.

---

Definitions:

Tax Imposed

An obligatory financial charge or other type of levy imposed upon a taxpayer by a governmental organization in order to fund government spending and various public expenditures.

Grapefruit

A citrus fruit known for its slightly bitter and sour taste, often eaten as part of breakfast or used in cooking.

Equilibrium Price

The price at which the quantity of goods supplied is equal to the quantity of goods demanded.

Inverse Demand Function

A function that expresses the price of a good or service as a function of the quantity demanded, typically used in economics to determine pricing strategies.