An Open Market Purchase of Securities by the Fed

question 511

Multiple Choice

An open market purchase of securities by the Fed

• A) decreases banksʹ reserves and increases banksʹ securities.
• B) involves a bank purchasing government securities from the Fed.
• C) increases banksʹ reserves and decreases banksʹ securities.
• D) decreases banksʹ total assets.

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Definitions:

Credit Terms

The agreements between sellers and buyers that stipulate the payment amount and due dates of payments to be made for goods and services.

Invoice Price

The original price of goods or services listed on an invoice, before any discounts or adjustments are applied.

Periodic Inventory System

An inventory accounting system where the inventory balance is updated at specific intervals, requiring physical inventory counts.

Perpetual Inventory System

An inventory management system where records of inventory are updated in real-time or near real-time with every sale or purchase.