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:

Competing Organizations

Entities that are in direct rivalry, offering similar goods or services within the same market.

Performance Expectations

The standards or benchmarks set for employees' work output and behavior in the workplace.

Behavioural Self-management

The process of controlling one’s actions or behavior through a self-imposed system of rewards and penalties.

Expectancy Theory

A motivation theory suggesting that individuals are more likely to perform actions if they expect that their actions will lead to desirable outcomes.