The Appropriate Monetary Policy in the Event of a Recessionary

question 203

Multiple Choice

The appropriate monetary policy in the event of a recessionary gap would be to

• A) increase the difference between the discount rate and the federal funds rate.
• B) engage in an open market purchase of U.S. government securities.
• C) increase the difference between the federal funds rate and the required reserve ratio.
• D) raise the required reserve ratio.

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Definitions:

Illegal Control

Unauthorized or unlawful dominance or influence over an entity, market, or activity.

Prices

The amount of money required to purchase a good, service, or asset.

Oligopolies

Market structures characterized by a small number of firms dominating the market, often leading to limited competition.

Horizontal Demand Curve

Represents a situation in which the demand for a product is perfectly elastic, indicating that consumers are willing to purchase any quantity of the product at a specific price.