--%>
Assignment Help - homework help

Open market operation-Deficient demand in economy

Open market operation signifies to the sale and purchase of securities by the Central Bank in case of deficient demand whenever AD falling short of AS at full employment, the Central Bank purchases securities in open market and makes payment to the sellers. The money flows out of central bank and reaches the commercial bank as deposits. This increases the lending capacity of banks, people can borrow more. This will increase AD.

   Related Questions in Microeconomics

  • Q : Competitive market Select the right

    Select the right answer of the question. A competitive market will: A) achieve an equilibrium price. B) produce shortages. C) produce surpluses. D) create disorder.

    		•
  • Q : Labor Supply-Elasticity I have a

    I have a problem in economics on Labor Supply-Elasticity. Please help me in the following question. When we try to list the labor supplies from least elastic to the most elastic, then the most accurate ranking would most likely be: (i) Competitive fir

    		•
  • Q : Limited liability of the owners I have

    I have a problem in economics on Limited liability of the owners. Please help me in the following question. The limited liability of the owners is one of the main benefits of: (i) Partnerships. (ii) Corporations. (iii) Wandering confidence schemers. (iv) Sole propriet

    		•
  • Q : Price elasticity inconsistent with

    Of the given price elasticities for market supply curves or market demand curves, and the one which is absolutely inconsistent along with standard economic theory would be one for that, across feasible ranges of prices as: (i) supply

    		•
  • Q : Typical pure competitor firm in industry

    When this firm is a typical pure competitor within this industry as in demonstrated figure, then the firm is: (i) making normal accounting profit. (ii) making zero economic profit. (iii) breaking even. (iv) into an industry within long run equilibrium

    		•
  • Q : Price elasticity beside horizontal

    Hey FRIEND I need your help for query as given below: The price elasticity beside a horizontal demand curve is constant at: (w) zero. (x) infinity. (y) 1. (z) -1. Can someone ex

    		•
  • Q : Stabilization function Choose the right

    Choose the right answer of thefollowing problem. In performing its stabilization function, it may be appropriate for the nation's central bank (the Federal Reserve in the United States) to take actions to: A) increase taxes to reduce inflation. B) increase interest ra

    		•
  • Q : Market Demand versus Individual Demand

    What is the difference between Market Demand and Individual Demand?

    		•
  • Q : Constant price elasticity plausible for

    Constant price elasticity equivalent to one for socket sets would be mainly plausible for demand curve as: (1) D1D1. (2) D2D2.  (3) D3D3. (4) D4D4. (5) D

    		•
  • Q : Minor Inefficiencies in Monopolistic

    Minor inefficiencies generated since monopolistic competitors differentiate their products may be more than offset through the: (w) increase in economic equity. (x) expansion of the psychologically-meaningful choices obtainable to consumers. (y) reduc

    		•