If the Fed Increases Its Open Market Purchases of Government

question 94

Multiple Choice

If the Fed increases its open market purchases of government securities,it exerts a downward pressure on the interest rate.Such a phenomenon is usually referred to as the ___________________ effect.

• A) income
• B) substitution
• C) open market
• D) liquidity
• E) expectations

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Definitions:

Net Worth

The total value of all assets owned by an individual or entity minus any liabilities or debts, representing the owner's equity in those assets.

Insider Trading

The illegal or legal trading of a public company's stock or other securities by individuals with access to nonpublic information about the company.

Public Announcement

A statement or declaration made to the general public, often by a company or government entity, regarding important information.

Merger

The combination of two or more companies into a single entity, typically involving the absorption of one by the other.