If the Fed Buys $20 Billion of U

question 120

Multiple Choice

If the Fed buys $20 billion of U.S.bonds in the open market and the reserve requirement is 5 percent,M1 will eventually

• A)Decrease by $100 billion.
• B)Decrease by $400 billion.
• C)Increase by $100 billion.
• D)Increase by $400 billion.

---

Definitions:

Budgeted Income Statement

A financial statement that shows projected revenues, costs, expenses, and net income for a specific period of time.

Cash Budget

A financial plan that estimates cash inflows and outflows over a particular period of time, often used to assess liquidity.

Budgeted Sales

Projected sales figures used in financial planning and budgeting that estimate future sales during a specific period.

Budgeted Purchases

An estimate of the total purchases a business plans to make during a certain time period.