If the Central Bank of Vinicius wants to reduce the inflation rate they could: a) sell public debt, this way the price of public debt increases and demand drops. b) sell public debt, therefore the price of the public debt decreases, the monetary base decreases, market interest increase, and demand drops. c) buy public debt, therefore the price of public debt increases, the market interest rates drop, therefore investment drops. d) sell public debt, therefore the price of public debt decreases, the market interest rates drop, this way helping to a drop in the aggregate demand
If the Central Bank of Vinicius wants to reduce the inflation rate they could: a) sell public debt, this way the price of public debt increases and demand drops. b) sell public debt, therefore the price of the public debt decreases, the monetary base decreases, market interest increase, and demand drops. c) buy public debt, therefore the price of public debt increases, the market interest rates drop, therefore investment drops. d) sell public debt, therefore the price of public debt decreases, the market interest rates drop, this way helping to a drop in the aggregate demand
Chapter17: Federal Deficits, Surpluses, And The National Debt
Section: Chapter Questions
Problem 13SQ
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If the Central Bank of Vinicius wants to reduce the inflation rate they could:
a) sell public debt, this way the price of public debt increases and demand drops.
b) sell public debt, therefore the price of the public debt decreases, the monetary base decreases, market interest increase, and demand drops.
c) buy public debt, therefore the price of public debt increases, the market interest rates drop, therefore investment drops.
d) sell public debt, therefore the price of public debt decreases, the market interest rates drop, this way helping to a drop in the aggregate demand
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