If the Fed Buys $25 Billion of U

question 95

Multiple Choice

If the Fed buys $25 billion of U.S.bonds in the open market and the reserve requirement is 20 percent,M1 will eventually

• A)Increase by $25 billion.
• B)Decrease by $25 billion.
• C)Increase by $125 billion.
• D)Decrease by $125 billion.

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Definitions:

Experimenter Effect

A phenomenon where the biases or expectations of the experimenter inadvertently influence the outcome of an experiment.

Random Assignment

A method used in experiments to evenly distribute participants across various groups, ensuring that each has an equal chance of being assigned to any group.

Selection Bias

The assignment of participants to experimental or control groups in such a way that systematic differences among the groups are present at the beginning of the experiment.

Placebo Effect

A phenomenon where a person experiences a perceived improvement in condition due to their expectations, rather than the effect of an active intervention.