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U.S. Treasury securities are issued by the Treasury in order to conduct monetary policy collect tax revenue fund reserve requirements finance budget

U.S. Treasury securities are issued by the Treasury in order to


  1. conduct monetary policy
  2. collect tax revenue
  3. fund reserve requirements
  4. finance budget deficits


Suppose that the FOMC decides that inflation is too high. The appropriate policy actions would be to conduct an open market ____________ in order to __________ the federal funds interest rate.

  1. sale, increase
  2. sale, decrease
  3. purchase, increase
  4. purchase, decrease


When the Federal Reserve lowers the federal funds interest rate, bank reserves ___________ , creating multiple rounds of loan and deposit __________.


  1. decrease, creation
  2. decrease, destruction
  3. increase, creation
  4. increase, destruction


If the FOMC acts to increase the federal funds interest rate, in the short-run ________________ and inflation ______________.


  1. aggregate demand shifts to the right, decreases
  2. aggregate demand shifts to the left, decreases
  3. aggregate demand shifts to the right, increases
  4. short-run aggregate supply shifts to the left, decreases


A monetary policy action to decrease the federal funds interest rate would initially change which of the following spending components?

  1. investment
  2. government purchases
  3. net exports
  4. taxes

Top Answer

?a) 4. Finance budget deficit (B) 2. Sale, decrease.... View the full answer

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