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

question 242

Multiple Choice

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

• A)increase.
• B)decrease.
• C)not change.
• D)increase if the economy is in a recession.

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Definitions:

Gross Profit Amount

The difference between sales revenue and the cost of goods sold before accounting for other expenses, indicating how efficiently a company uses labor and supplies in production.

Periodic Inventory System

A method of inventory valuation where updates to the inventory account occur at periodic intervals, rather than continuously.

Inventory

The goods and materials a business holds for the purpose of resale or production, reflected as an asset on the balance sheet.

Merchandise Purchased

Goods bought by a business for the purpose of resale, forming part of its inventory.