If the Fed Carries Out an Open Market Operation and Sells

question 140

Multiple Choice

If the Fed carries out an open market operation and sells U.S. government securities, the federal funds rate ________ and the quantity of reserves ________.

• A) falls; increases
• B) rises; increases
• C) falls; decreases
• D) rises; decreases

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Definitions:

Centrists

Individuals or political ideologies that advocate for moderate policies, often seeking a middle ground between extreme positions.

Demand-Side Market Failure

Occurs when demand in a market does not reflect the true value of a good or service, often due to externalities or information asymmetries.

Demand Curves

graphically represent the relationship between the price of a good and the quantity demanded by consumers at various prices.

Median-Voter Model

A theory in political science suggesting that the outcome of majority rule voting systems will reflect the preferences of the median voter.