The Fed's Sale of U

question 100

Multiple Choice

The Fed's sale of U.S. government securities in its open market operations constitutes

• A) a restrictive policy because it lowers the amount of total reserves in the banking system.
• B) a restrictive policy because it raise the amount of required reserves in the banking system.
• C) an expansionary policy because it raises the amount of total and excess reserves in the banking system.
• D) an expansionary policy because it raises the amount of excess reserves and lowers the amount of required reserves in the banking system.
• E) an expansionary policy because it raises the amount of required reserves in the banking system.

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Definitions:

Breakeven Analysis

A financial calculation to determine the number of products or services a company must sell to cover its costs.

Cumulative Dollar Value

The total monetary value of something accumulated over time.

Investment

The action or process of allocating resources, usually money, with the expectation of generating an income or profit.

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