Which of the Following Best Describes What Occurs When Monetary

question 7

Multiple Choice

Which of the following best describes what occurs when monetary authorities sell government securities?

• A) There is a decrease in the size of commercial banks' excess reserves, the money supply increases, and interest rates fall, thereby causing a decrease in investment spending and real GDP
• B) There is a decrease in the size of commercial banks' excess reserves, the money supply decreases, and the interest rates rise, thereby causing a decrease in investment spending and real GDP
• C) There is a decrease in the size of commercial banks' excess reserves, the money supply decreases, and interest rates rise, thereby causing an increase in investment spending and real GDP
• D) There is an increase in the size of commercial bank reserves, the money supply increases, and interest rates fall, thereby causing an increase in investment spending and real GDP

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Definitions:

Discrimination

The practice of according individuals or groups inferior treatment in hiring, occupational access, education and training, promotion, wage rates, or working conditions even though they have the same abilities, education, skills, and work experience as other workers.

Labor Force

The total number of people employed or actively seeking employment in an economy or specific labor market.

Competitive Economy

An economic system where businesses operate in a free market, with minimal barriers to entry and where prices are determined by supply and demand.

Demand Curves

Graphs that show the relationship between the price of a good and the quantity demanded by consumers at those prices.