When the Fed Purchases Securities on the Open Market,the Securities

question 112

Multiple Choice

When the Fed purchases securities on the open market,the securities it buys are

• A)common stock of United States corporations.
• B)corporate bonds.
• C)securities issued by state governments.
• D)securities issued by the federal government.
• E)All of the choices are truE.

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Definitions:

Economies of Scale

The cost advantage achieved by an increase in production, leading to a decrease in the average cost per unit through efficient allocation of resources and spreading of fixed costs.

Cost-output Elasticity

The ratio of the percentage change in cost relative to the percentage change in output, indicating how costs change with output levels.

Marginal Cost

The cost associated with producing one additional unit of a product.

Technological Change

Development of new technologies allowing factors of production to be used more effectively.