Which of the Following Is True Concerning the Operation of Monetary

question 249

Multiple Choice

Which of the following is true concerning the operation of monetary policy?

• A) When the Federal Reserve sells a government security it withdraws reserves from the commercial banking system.
• B) The Federal Reserve may only sell government securities to fund government deficits that have been approved by the President of the United States.
• C) When the Federal Reserve purchases a government security it withdraws reserves from commercial banks.
• D) When the Federal Reserve purchases a government security the debt of the U.S. government is decreased.

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Definitions:

Conservative Behavior

A tendency to prefer traditional and established ways of doing things over new approaches.

Upward Counterfactual Thinking

The mental process of comparing current outcomes with more positive, alternative scenarios, often leading to feelings of dissatisfaction or motivation for improvement.

Downward Counterfactual Thinking

The mental process of imagining worse alternatives to events that have already occurred, often leading to feelings of relief or contentment.

Illusion Of Control

A cognitive bias that leads individuals to overestimate their ability to control events.