If the Fed Buys $2 Billion of Short-Term Securities Issued

question 48

Multiple Choice

If the Fed buys $2 billion of short-term securities issued by the government of Japan and pays for them by writing a check for $2 billion

• A) its assets will rise by $2 billion and its liabilities will fall by $2 billion.
• B) its assets will fall by $2 billion and its liabilities will rise by $2 billion.
• C) its assets and liabilities will both fall by $2 billion.
• D) its assets and liabilities will both rise by $2 billion.

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Definitions:

MR

Marginal Revenue, which refers to the additional income generated from selling one more unit of a good or service.

Variable Costs

Costs that change in proportion to the level of output produced.

Pure Monopolist

A single seller in a market who has exclusive control over a product or service, facing no competition.

Output

The aggregate quantity of products or services generated by a company, sector, or economic system within a specified timeframe.