Table 141 Monetary Aggregates of the U Assume an Original Balance Sheet: Refer to Table 14

question 48

Multiple Choice

Table 14.1 Monetary Aggregates of the U.S.Financial System
$\begin{array}{|l|r|}\hline\text { Item } & \text { Amount } \\\hline \text { Cash held by public } & \text { \$250billion } \\\hline\text { Transactions deposits } & \text { \$1,000billion } \\\hline\text { Required reserves } & \text { \$150billion } \\\hline\text { Excess reserves } & \text { \$0billion } \\\hline \text { U.S. bonds held by public } & \$ 1,000 \text { billion }\\\hline \end{array}$

Assume an original balance sheet: Refer to Table 14.1.If the Fed buys $10 billion in bonds from the public,all of the following are true except

• A)The public will still hold $990 billion worth of bonds.
• B)M1 will increase initially by $10 billion.
• C)The discount rate will rise.
• D)Additional increases in M1 will occur after the multiplier process.

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Definitions:

Distributorship

A business arrangement whereby one entity is granted the right to sell or distribute a manufacturer's products within a specified territory or market.

Antitrust Laws

Legislation enacted to promote competition and restrict monopolistic practices by prohibiting agreements or practices that restrain trade.

Foreign Sovereign Immunities Act

A federal law in the United States that sets limits on the extent to which foreign nations and their related entities can be sued in U.S. courts.

Federal Court Jurisdiction

The authority granted to federal courts to hear and decide cases based on subject matter or parties involved.