Question

Open-market purchases Group of answer choices a-decrease private investment and real GDP. b-decrease private investment and...

Open-market purchases

Group of answer choices

a-decrease private investment and real GDP.

b-decrease private investment and increase real GDP.

c-increase private investment and decrease real GDP.

d-increase private investment and real GDP.

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Homework Answers

Answer #1

Open market purchase and sale of Government bonds come under the open market operations of the Federal reserve Bank

When the goal is to increase the money supply, investment and the real GDP then the bank purchases the government bonds or securities

The policy is also called expansionary monetary policy

Opposite to it is contractionary monetary policy in which the goal is to reduce the money supply

So this is only satisfied by the option d

Option A satisfies the contractionary monetary policy

Hence the correct answer is option d

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