13. If the Fed conducts Open Market Purchase, then: a. price of bonds increase, interest rates decrease and money supply...
13. If the Fed conducts Open Market Purchase, then:
a. price of bonds increase, interest rates decrease and money supply decreases.
b. price of bonds decrease, interest rates increase and money supply decreases.
c. price of bonds increase, interest rates decrease and money supply increases.
d. price of bonds decrease, interest rates decrease and money supply increases.
Homework Answers
Answer
Option d
d. price of bonds decreases, interest rates decrease and the money supply increases.
the purchase increases money supply. it shifts the money supply curve to right which decreases interest rate and the decreases in interest rate increase the demand for the financial assets which increases the price of bonds.
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13. If the Fed conducts Open Market Purchase, then: a. price of bonds increase, interest rates decrease and money supply...
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