If the Fed Buys Bonds in the Open Market,which of the Following

question 149

Multiple Choice

If the Fed buys bonds in the open market,which of the following will likely NOT happen?

• A) Investment spending increases.
• B) Short-term interest rates increase.
• C) Aggregate demand increases.
• D) The monetary base increases.

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Definitions:

BBB

A bond credit rating given to a medium credit quality debt instrument, indicating moderate risk.

Primary Market Transaction

Deals with the issuance of new securities directly from the issuer to investors.

Secondary Market Transaction

The buying and selling of previously issued securities, such as stocks and bonds, between investors, rather than directly from issuing companies.

Bond Issue

The process of issuing new bonds by a corporation or government to raise capital, involving the creation of new debt securities to be sold to investors.