If the Account Manager Finds That the Current Level of Bank

question 24

Multiple Choice

If the account manager finds that the current level of bank reserves is greater than the desired level indicated in the most recent directive from the FOMC, he will

• A)order banks to reduce their reserves.
• B)order banks to raise their interest rates in an attempt to get them to loan out more of their reserves.
• C)conduct an open market purchase.
• D)conduct an open market sale.

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Definitions:

Economic Profit

The difference between total revenue and total costs, including both explicit and implicit costs, representing the excess that remains after a firm has paid all costs.

Pure Monopoly

A market structure where a single company is the sole producer of a particular good or service, facing no competition.

Pure Competitor

A firm or business operating in a market with many sellers offering identical products, meaning it has no control over market price.

Barriers To Entry

Obstacles that prevent or hinder new competitors from easily entering an industry or area of business.