If the Fed Purchases $10 Billion of U

question 78

Multiple Choice

If the Fed purchases $10 billion of U.S. Treasury bills, the monetary base will increase by

• A)$10 billion.
• B)$10 billion times the money multiplier.
• C)an amount that depends on the ratio of excess reserves to checkable deposits.
• D)an amount that depends on the ratios of excess reserves to checkable deposits and currency to checkable deposits.

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Definitions:

External Cost

Costs that are not borne by the producer or consumer, but by a third party or the environment, such as pollution.

Air Conditioning

A system for controlling the humidity, ventilation, and temperature in a building or vehicle to provide a comfortable indoor environment.

Public Good

A public good refers to a product or service offered to every member of a society for free, regardless of profit, by either governmental entities or private individuals or groups.

Police Protection

A mechanism of public security provided by governmental police forces aiming to maintain order, enforce the law, and prevent and investigate crime.