Assuming the Federal Reserve Makes an Open-Market Purchase of a Government

question 34

Multiple Choice

Assuming the Federal Reserve makes an open-market purchase of a government security worth $10,000.By writing a check to pay for this security,the Federal Reserve

• A)reduces the balance of its assets by $10,000.
• B)reduces the balance of its liabilities by $10,000.
• C)neither reduces the balance of its assets nor the balance of its liabilities by $10,000.
• D)creates a new $10,000 liability against itself.
• E)both c and d are correct.

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Definitions:

Discount Store

A retail store that sells products at prices lower than the typical market value, often by buying in bulk or selling overstock items.

Below Wholesale

Pricing that is lower than the standard wholesale price, often involving large quantities of goods being sold to retailers or other bulk buyers.

Markdown Timing

The strategic determination of when to reduce the selling price of goods, typically to clear outdated or excess inventory.

Valuable Selling Space

Locations or areas within a retail environment considered most effective for displaying products to attract customers and encourage purchases.