Suppose the Fed Carries Out an Open Market Purchase and Credits

question 46

Multiple Choice

Suppose the Fed carries out an open market purchase and credits the account of a bank by $160,000. Further suppose that the reserve ratio (RR) is 10%. By how much is the money supply expected to change?

• A) $160,000
• B) $1.6 million
• C) $16 million
• D) $1.76 million

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Definitions:

Anima

In Jungian psychology, the unconscious feminine side of a man, or the archetype representing the female aspect of a man's personality.

Masculine Side

The collection of attributes, behaviors, and roles generally associated with boys and men, as determined by societal norms.

Defense Mechanism

Psychological strategies unconsciously used to protect oneself from anxiety by denying and distorting reality.

Reaction Formation

Psychological defense mechanism in which a person forms an opposite emotional or behavioral reaction to the way he or she really feels to keep those true feelings hidden from self and others.