Which of the Following Statements Is True When the Fed

question 11

Multiple Choice

Which of the following statements is true when the Fed increases reserves by buying a government bond from a bank?

• A)The amount of reserves in the banking system will increase by an amount greater than the amount of the bond purchase.
• B)The amount of loans made by the banking system will increase by the amount of the bond purchase.
• C)The amount of loans made by that bank will be greater than the increase in reserves.
• D)The amount of deposits made by the banking system will increase by the amount of the bond purchase.
• E)The amount of reserves in the banking system will increase by the amount of the bond purchase.

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Definitions:

Crop Price

The amount of money that farmers receive for the agricultural products they produce, which can vary based on supply and demand.

Loan Price

The total cost associated with borrowing money, which includes the interest rate and any other fees or charges.

Agricultural Subsidies

Financial assistance programs provided by the government to support farmers, intended to stabilize food prices and ensure a reliable food supply.

Agricultural Act

Legislation enacted by a government to regulate agricultural practices, supports, and policies aimed at stabilizing or enhancing the agricultural sector.