If the Fed Sells $7

question 90

Multiple Choice

If the Fed sells $7.5 billion of U.S.bonds in the open market and the reserve requirement is 15 percent,M1 will eventually

• A)Decrease by $50 billion.
• B)Increase by $7.5 billion.
• C)Increase by $50 billion.
• D)Increase by $1.125 billion.

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Definitions:

Anhydride

A compound formed from another compound by the removal of a molecule of water; commonly associated with carboxylic acid anhydrides in organic chemistry.

Nitrile

Organic compounds that contain a cyano group (-C≡N) attached to an alkyl group, used in the manufacture of rubbers, resins, and pharmaceuticals.

Amide

Organic compounds characterized by a carbonyl group attached to a nitrogen atom, often found in proteins and other important biological molecules.

Stereochemistry

An area of chemistry concerned with the three-dimensional arrangement of atoms in molecules and its impact on their chemical reactions and properties.