When the Federal Reserve sells government bonds to the public, it:

When the Federal Reserve sells government bonds to the public, it:
 a. increases the M1 money supply and increases the reserves of the commercial banking system.
  b. increases the M1 money supply, while reducing the reserves of the commercial banking system.
  c. reduces the M1 money supply, while increasing the reserves of the commercial banking system.
  d. reduces the M1 money supply and decreases the reserves of the commercial banking system.

QUESTION 2

Infrastructure investment appears to have little impact on economic growth and development.
 a. True
  b. False
  Indicate whether the statement is true or false

QUESTION 3

If the Fed decides to engage in an open market operation to increase the money supply, what will it do?
 a. Sell Treasury bonds, bills, or notes on the bond market.
  b. Buy Treasury bonds, bills, or notes on the bond market.
  c. Increase the required reserve ratio.
  d. Increase the fed funds rate.

QUESTION 4

In order for a country to develop a high per capita GDP, it must have a rich endowment of natural resources, particularly energy and mineral resources.
 a. True
  b. False
  Indicate whether the statement is true or false

QUESTION 5

If the Fed decides to use an open market operation to reduce the money supply by 1 million, and if the money multiplier is 10, then what total amount of Treasury securities must the Fed initially sell?
 a. 10,000,000.
  b. 1,000,000.
  c. 100,000.
  d. 10,000.

QUESTION 6

If population grows faster than GDP, then per capita GDP must fall.
 a. True
  b. False
  Indicate whether the statement is true or false

QUESTION 7

Political instability is a deterrent to long-term private investment.
 a. True
  b. False
  Indicate whether the statement is true or false