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:

Trade Deficit

Results when a country imports more goods than it exports.

Imports

Goods or services brought into one country from another for the purpose of sale or use.

Exports

Goods, services, or technologies sent from one country to another for trade or sale.

Commercial Infrastructure

The foundational physical and organizational structures needed for the operation of a market and its services.