Here Is How an Open Market Purchase Works: the Fed

question 46

Multiple Choice

Here is how an open market purchase works: The Fed __________ government securities to (from) a commercial bank,which raises the bank's deposits at the __________ and increases the bank's __________.

• A) sells; Fed; reserves
• B) buys; Fed; reserves
• C) buys; Treasury; discount loans
• D) sells; Treasury; required reserve ratio
• E) buys; Fed; liabilities

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Definitions:

Survey Research

Survey research involves collecting data and information from a sample of individuals through their responses to questions, assessing opinions or behaviors.

Participants

Individuals who take part in a particular activity or event, especially in the context of research or experiments.

Dishonest Answers

Responses provided by individuals that intentionally hide the truth or mislead, often for personal gain or to avoid negative outcomes.

Correlation

Usually a number between +1.0 and -1.0 that indicates whether and how much two variables are related. Correlation indicates whether an increase in one variable will increase or decrease another variable. Correlation indicates only that two variables are somehow related, not that one variable causes the other to increase or decrease.