If the Fed Sells U

question 147

Multiple Choice

If the Fed sells U.S.government securities to drain reserves from banks,which of the following will probably occur?

• A)The demand for money will increase and the interest rate will rise.
• B)The money supply will increase and the interest rate will fall.
• C)The interest rate will rise and the quantity of money demanded will fall.
• D)The money supply will decrease and the interest rate will fall.
• E)The interest rate will fall and the quantity of money demanded will increase.

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Definitions:

Utility Schedule

A representation that shows various quantities of a commodity or service and the utility or satisfaction derived from each.

Marginal Utility

The augmented satisfaction or value derived from the consumption of one extra unit of a product or service.

Total Utility

Measures the total satisfaction or benefit that a person derives from consuming a certain quantity of a good or service.

Utility Schedule

A table showing the different levels of utility or satisfaction derived from consuming varying amounts of a good or service.