Using the Money Demand and Money Supply Model,an Open Market

question 242

Multiple Choice

Using the money demand and money supply model,an open market purchase of Treasury securities by the Federal Reserve would cause the equilibrium interest rate to

• A)increase.
• B)decrease.
• C)not change.
• D)increase if the economy is in a recession.

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Definitions:

Total Fixed Cost

Total Fixed Cost is the sum of all costs that remain constant regardless of the level of production or business activity.

Economies of Scale

Businesses gain cost benefits from increasing their scale of operations, leading to a decline in the cost per unit of output as the production size enlarges.

Q₄

Refers typically to the fourth quarter of a financial year, marking the last segment of the fiscal calendar for businesses and economies.

Economic Profit

The variance between total income and all costs, both seen and unseen, of a company.