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The demand curve and supply curve for one-year discount bonds with a face value of $1,030 are represented by the following equations: Bd Price = -0.7Quantity + 1,100 B Price = Quantity + 690 Suppose that, as a result of monetary policy actions, the Federal Reserve sells 60 bonds that it holds. Assume that bond demand and money demand are held constant. Which of the following statements is true? O A. If the Fed decreases the supply of bonds in the market by 60, at any given price, the bond supply equation will become Price = Quantity + 790. O B. If the Fed decreases the supply of bonds in the market by 60, at any given price, the bond supply equation will become Price = Quantity + 730. OC. If the Fed increases the supply of bonds in the market by 60, at any given price, the bond supply equation will become Price = Quantity + 630. O D. If the Fed increases the supply of bonds in the market by 60, at any given price, the bond supply equation will become Price = Quantity + 750.

The demand curve and supply curve for one-year discount bonds with a face value of $1,030 are represented by the following equations: Bd Price = -0.7Quantity + 1,100 B Price = Quantity + 690 Suppose that, as a result of monetary policy actions, the Federal Reserve sells 60 bonds that it holds. Assume that bond demand and money demand are held constant. Which of the following statements is true? O A. If the Fed decreases the supply of bonds in the market by 60, at any given price, the bond supply equation will become Price = Quantity + 790. O B. If the Fed decreases the supply of bonds in the market by 60, at any given price, the bond supply equation will become Price = Quantity + 730. OC. If the Fed increases the supply of bonds in the market by 60, at any given price, the bond supply equation will become Price = Quantity + 630. O D. If the Fed increases the supply of bonds in the market by 60, at any given price, the bond supply equation will become Price = Quantity + 750.

Macroeconomics: Private and Public Choice (MindTap Course List)
Macroeconomics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN:9781305506756
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Chapter13: Money And The Banking System
Section: Chapter Questions
Problem 16CQ
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The demand curve and supply curve for one-year discount bonds with a face value of $1,030 are represented by the following equations: Bd. Price = -0.7Quantity +1,100 B. Price = Quantity + 690 Suppose that, as a result of monetary policy actions, the Federal Reserve sells 60 bonds that it holds Assume that bond demand and money demand are held constant. Which of the following statements is true? O A. If the Fed decreases the supply of bonds in the market by 60, at any given price, the bond supply equation will become Price = Quantity + 790. O B. If the Fed decreases the supply of bonds in the market by 60, at any given price, the bond supply equation will become Price = Quantity + 730. O C. If the Fed increases the supply of bonds in the market by 60 , at any given price, the bond supply equation will become Price = Quantity + 630. O D. If the Fed increases the supply of bonds in the market by 60, at any given price, the bond supply equation will become Price = Quantity + 750.
Transcribed Image Text:The demand curve and supply curve for one-year discount bonds with a face value of $1,030 are represented by the following equations: Bd. Price = -0.7Quantity +1,100 B. Price = Quantity + 690 Suppose that, as a result of monetary policy actions, the Federal Reserve sells 60 bonds that it holds Assume that bond demand and money demand are held constant. Which of the following statements is true? O A. If the Fed decreases the supply of bonds in the market by 60, at any given price, the bond supply equation will become Price = Quantity + 790. O B. If the Fed decreases the supply of bonds in the market by 60, at any given price, the bond supply equation will become Price = Quantity + 730. O C. If the Fed increases the supply of bonds in the market by 60 , at any given price, the bond supply equation will become Price = Quantity + 630. O D. If the Fed increases the supply of bonds in the market by 60, at any given price, the bond supply equation will become Price = Quantity + 750.
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