When a Bank Borrows Reserves from the Federal Reserve

question 10

Multiple Choice

When a bank borrows reserves from the Federal Reserve

• A) the monetary base remains unchanged because no new reserves are created.
• B) the Fed may choose to nullify the effect on the monetary base through an open market sale.
• C) the monetary base increased as new reserves enter the banking system.
• D) both b and c.
• E) none of the above.

---

Definitions:

Universal Principles Stage

is a level in moral development theory where moral reasoning is based on abstract reasoning and principles of justice.

Moral Development

The process by which individuals develop their understanding of morality, ethics, and values as they grow and mature.

Universal Ethical Principles

Fundamental norms and values that are widely acknowledged as a basis for ethical conduct, irrespective of cultural, religious, or societal differences.

Universal Ethical Principles

Fundamental moral guidelines that are believed to be universally applicable to all individuals regardless of culture or personal background.