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When the FED buys 10-year treasury notes and mortgages + student loan backed securities, inflation in...

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Economics

When the FED buys 10-year treasury notes and mortgages +student loan backed securities, inflation in the short runwill

  1. Drop to 0%

  2. Remain the same

  3. Increase


When the FED buys 10-year treasury notes and mortgages +student loan backed securities, inflation in the long runwill

  1. Drop to 0%

  2. Remain the same

  3. Increase



When the FED buys 10-year treasury notes and mortgages +student loan backed securities, consumption and investmentswill

  1. Drop to 0%

  2. Remain the same

  3. Increase




How will open market purchases affect the economy shortrun GDP

  1. Go up

  2. Not change

  3. Not enough info to answer





Answer & Explanation Solved by verified expert
3.8 Ratings (420 Votes)
When FED buys 10 years treasury notes and mortgages student loan backed securities Money Supply increases which by lowering the interest rate increases investment spending This in turn Increases Aggregate Demand In the short run the effect of    See Answer
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