Which of the Following Is Correct

question 5

Multiple Choice

Which of the following is correct?

• A)Federal Reserve purchases of securities will increase the reserves available to commercial banks.
• B)Federal Reserve purchases of securities exert upward pressure on interest rates in the short run.
• C)The Federal Reserve System determines the ratio of currency held by the public to the money supply (M1).
• D)Federal Reserve purchases of securities will decrease the reserves available to commercial banks.

---

Definitions:

Shares Reacquired

Securities that were previously sold to the public and then bought back by the issuing company.

Originally Issued

Refers to securities or financial instruments that are provided to investors directly from the issuer for the first time.

Dividend Declared

A portion of a company's earnings that is approved by the board of directors to be distributed to shareholders.

Charter

A legal document that establishes a corporation or city, outlining its rights, privileges, and purposes.