When the Fed Sells Bonds, the Fed

question 112

Multiple Choice

When the Fed sells bonds, the Fed:

• A)reduces the reserves and the federal funds rate increases.
• B)increases the reserves and the federal funds rate decreases.
• C)reduces the reserves and the federal funds rate decreases.
• D)increases the reserves and the federal funds rate increases.

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Definitions:

Tippee

A person who receives inside information.

Material Fact

A fact that, if known, would influence a person's decision-making related to a contract, transaction, or legal case.

Insider Trading

The unlawful act of conducting trades on the stock market for personal gain by exploiting privileged, non-public information.

Securities Exchange Act

A federal law governing the trading of securities, such as stocks and bonds, aimed at protecting investors and maintaining fair and orderly markets.