An Open Market Purchase of Securities by the Fed Leads

question 81

Multiple Choice

An open market purchase of securities by the Fed leads to all of the following EXCEPT

• A)an increase in the monetary base.
• B)an initial increase in excess reserves.
• C)an increase in banks' reserves.
• D)a decrease in the quantity of money.
• E)an increase in bank lending.

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Definitions:

Coin Flip

A basic randomization method used to determine outcomes by flipping a coin.

Probability

A measure of the likelihood that an event will occur, expressed as a number between 0 and 1, where 0 indicates impossibility and 1 indicates certainty.

52-Card Deck

A standard deck of playing cards used in many card games, consisting of four suits: hearts, diamonds, clubs, and spades, each with 13 ranks from Ace through King.

Draw

To produce a picture or diagram by making lines and marks on paper with a pencil, pen, etc., or within the context of games, a result in which opponents finish with equal scores.