When the Fed Sells $100 Million of Securities to a Commercial

question 75

Multiple Choice

When the Fed sells $100 million of securities to a commercial bank the

• A)required reserve ratio decreases.
• B)money supply increases.
• C)bank's reserves decrease.
• D)monetary base increases.
• E)bank's reserves do not change.

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Definitions:

Upward Sloping

A line on a graph that shows an increase in a certain variable as another variable increases.

Sunk Costs

Costs that have already been incurred and cannot be recovered, and therefore, should not be considered in making future economic decisions.

All-Day Ticket

A pass that allows unlimited use or access to a service, such as public transport or an event, for the entire day.

Marginal Benefit

The additional satisfaction or utility gained from consuming or producing one extra unit of a good or service.