If the Fed Sells Government Securities to the General Public

question 267

Multiple Choice

If the Fed sells government securities to the general public in the open market,

• A)the Fed gives the securities to the public; the public pays for the securities by writing checks that, when cleared, will increase commercial bank reserves at the Fed.
• B)the Fed gives the securities to the public; the public pays for the securities by writing checks that, when cleared, will decrease commercial bank reserves at the Fed.
• C)the public gives the securities to the Fed in exchange for a Fed check, which, when deposited at commercial banks, will increase their reserves at the Fed.
• D)the public gives the securities to the Fed in exchange for a Fed check, which, when deposited at commercial banks, will decrease their reserves at

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Definitions:

Serious Litigation

Serious Litigation involves legal actions or proceedings that are complex, involve significant amounts of money, or have major legal implications.

Fraud

Wrongful or criminal deception intended to result in financial or personal gain.

Tax Evasion

The illegal practice of not paying taxes by individuals or businesses by not reporting income, reporting expenses not legally allowed, or by not paying taxes owed.

Money Laundering

The illegal process of making large amounts of money generated by a criminal activity, such as drug trafficking or terrorist funding, appear to be earned legally.