The demand ourve and supply ourve for one year discount bonds with a face value of $1,020 are represented by the following equations o Price -0.BQuantity 1,160 Price Quantity 700 Suppose that, as a result of monetary policy actions, the Federal Reserve sells 100 bonds that it holds. Assume that bond demand and money demand are held constant Which of the following statements is true A. the Fed increases the supply of bonds in the market by 100, at any given price, the bond supply equation will become Price Quantity+ 000. OB. the Fed decreases the supply of bonds in the market by 100, at any given price, the hond supply equation will become Price Quantity 840, OC. tihe Fed decreases the supply of bonds in the market by 100, at any given price, the bond epply equation wil become Price Quantity + 780. OD. IHthe Fed increases the supply of bonds in the market by 100, at any given prioe, the bond supply eqution will become Price Quantity 0. Caloulate the effect on the equilbrium interest rale in this market, an a result of the Federal Reserve action. toN (Round your intermediate calulations to the nearest whole number. Round your final answer to two decimal places) The expected interest rate on a one-year discount bond will
The demand ourve and supply ourve for one year discount bonds with a face value of $1,020 are represented by the following equations o Price -0.BQuantity 1,160 Price Quantity 700 Suppose that, as a result of monetary policy actions, the Federal Reserve sells 100 bonds that it holds. Assume that bond demand and money demand are held constant Which of the following statements is true A. the Fed increases the supply of bonds in the market by 100, at any given price, the bond supply equation will become Price Quantity+ 000. OB. the Fed decreases the supply of bonds in the market by 100, at any given price, the hond supply equation will become Price Quantity 840, OC. tihe Fed decreases the supply of bonds in the market by 100, at any given price, the bond epply equation wil become Price Quantity + 780. OD. IHthe Fed increases the supply of bonds in the market by 100, at any given prioe, the bond supply eqution will become Price Quantity 0. Caloulate the effect on the equilbrium interest rale in this market, an a result of the Federal Reserve action. toN (Round your intermediate calulations to the nearest whole number. Round your final answer to two decimal places) The expected interest rate on a one-year discount bond will
Chapter1: Making Economics Decisions
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Transcribed Image Text:The demand curve and supply ourve for one-year discount bonds with a face value of $1,020 are represented by the following equations:
e Price-0.8Quantity + 1,160
* Price- Quantity + 700
Suppose that, as a result of monetary policy actions, the Federal Reserve sells 100 bonds that it holds. Assume that bond demand and money demand are held constant Which of the following statements is true
A. the Fed increases the supply of bonds in the market by 100, at any given price, the bond supply equation will tecome Price = Quantity + 600.
OB. Wthe Fed decreases the supply of bonds in the market by 100, at any given price, the bond supply equation will become Price Quantity B40.
OC. If the Fed decreases the supply of bonds in the market by 100, at any given price, the bond eupply equation will become PriceQuantity + 780.
OD. H the Fed increasos the supply of bonds in the market by 100, at any given prion, the bond supply equation will become Price - Quantity + 800
Calculate the effect on the equilibrium interest rate in this market, as a result of the Federal Reserve action.
toN. (Round your intermediate calkulations to the nearest whole number. Round your final answer ta hwo decimal places)
The expected interest rate on a one-year discount bond will
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