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Ultimate Flashcard Review
Video
Open Market Operations
Key Concepts to Understand
Question 1 of 3
When the central bank purchases government bonds from a commerical bank, what happens to the money supply?
It increases
It decreases
It stays the same
There is no effect on the money supply
Practice Questions: Test Your Understanding
Apply what you've learned with these practice questions. These questions test your understanding of the key concepts.
Question 1 of 3
If the central bank conducts an open market sale of government bonds (in a traditional, limited reserves system), what is the expected impact on the money supply and the nominal interest rate?
Money supply increases, nominal interest rate decreases.
Money supply decreases, nominal interest rate increases.
Money supply increases, nominal interest rate increases.
Money supply decreases, nominal interest rate decreases.
No change in money supply, nominal interest rate increases.
Key Takeaways
- 📊Master the fundamentals: Understanding these core concepts is essential for success in AP Economics.
- ✅Practice makes perfect: Use the interactive exercises and practice questions to reinforce your understanding.