Suppose the Fed Forecasts a Reduction in Cash Leakages

question 170

Multiple Choice

Suppose the Fed forecasts a reduction in cash leakages.It might offset the effect of this on the money supply by

• A) buying government securities.
• B) selling government securities.
• C) lowering the required reserve ratio.
• D) lowering the discount rate.

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Definitions:

Decreases

A reduction in quantity, size, value, or extent of a specific economic variable or commodity.

Expected Price Level

The anticipated average price across all goods and services in an economy over a future period.

Aggregate Demand

Unified request for the provision of goods and services in an economy, calculated at a specific scale of overall price for a given duration.

Aggregate Supply

The total supply of goods and services that firms in an economy are willing and able to sell at a given price level in a specific time period.