The Money Supply Contracts When the Fed

question 50

Multiple Choice

The money supply contracts when the Fed:

• A)gathers up worn and ripped Federal Reserve notes.
• B)sells government securities.
• C)borrows from the U.S. Treasury.
• D)purchases equities in major U.S. corporations.

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Definitions:

Short-Run Supply Curve

A graphical depiction showing the relationship between the price of a good and the quantity supplied over a short period, wherein some inputs are fixed.

Long-Run Supply Curve

A graphical representation showing the relationship between the price of a good and the quantity supplied over a long period, accounting for adjustments in all factors of production.

Short-Run Supply Curve

A graphical representation showing the relationship between the price of a good and the amount that producers are willing to supply, over a short period.

Output

The quantity of goods or services produced by a firm, industry, or economy in a given time period.