When the Federal Reserve Wishes To, in the Long Run

question 25

Multiple Choice

When the Federal Reserve wishes to, in the long run, increase real GDP it

• A)will increase the money supply by buying bonds.
• B)will increase the money supply by selling bonds.
• C)will decrease the money supply by selling bonds.
• D)has no policy options that will accomplish this.

---

Definitions:

Producer Surplus

The difference between the amount a producer is paid for a good versus what they would have been willing to accept, reflecting the benefit to producers from participating in the market.

Consumer Surplus

The difference between the total amount consumers are willing to pay for a good or service and the total amount they actually pay.

Marginal Revenue Function

A mathematical formula that shows the additional revenue generated by selling one more unit of a good or service.

High Definition Television

Television systems that have a higher resolution than standard-definition television, offering viewers more detailed and clearer images.