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The Effect of an Open Market Purchase on Reserves Differs

question 62

Multiple Choice

The effect of an open market purchase on reserves differs depending on how the seller of the bonds keeps the proceeds.If the proceeds are kept in ________,the open market purchase has no effect on reserves; if the proceeds are kept as ________,reserves increase by the amount of the open market purchase.


Definitions:

Marginal Costs

The additional cost incurred in producing one more unit of a good or service, critical in decision-making regarding production volumes.

Standby Seats

Airline or event tickets made available last minute, typically at a lower price, for customers willing to wait for no-shows or extra capacity.

Full Capacity

The maximum level of output that a facility can produce under normal operating conditions.

Marginal Cost

The increase in total production costs from making one additional unit of a product or service.

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