Which of the Following Is Correct? When the Federal Reserve

question 62

Multiple Choice

Which of the following is correct? When the Federal Reserve buys government securities from the public, the money supply

• A) contracts and commercial bank reserves increase.
• B) expands and commercial bank reserves decrease.
• C) contracts and commercial bank reserves decrease.
• D) expands and commercial bank reserves increase.

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Definitions:

Efficiency Wage

The theory that employers pay a higher wage than the market equilibrium to increase worker productivity and reduce turnover.

Labor

The effort by humans to produce goods or services in exchange for wages or salary.

Supply

The total amount of a product or service that is available to consumers, often influenced by price, production costs, and external factors.

Labor Union

An organization of workers formed to protect and advance their rights and interests, typically through collective bargaining.