Which of the Following Best Describes What Occurs When Monetary

question 199

Multiple Choice

Which of the following best describes what occurs when monetary authorities sell government securities?

• A) There is a decrease in the size of commercial banks' excess reserves, the money supply increases, and interest rates fall, thereby causing a decrease in investment spending and real GDP.
• B) There is a decrease in the size of commercial banks' excess reserves, the money supply decreases, and interest rates rise, thereby causing a decrease in investment spending and real GDP.
• C) There is a decrease in the size of commercial banks' excess reserves, the money supply decreases, and interest rates rise, thereby causing an increase in investment spending and real GDP.
• D) There is an increase in the size of commercial bank reserves, the money supply increases, and interest rates fall, thereby causing an increase in investment spending and real GDP.

---

Definitions:

Business Documents

Written records that are essential for the operation and management of a business, such as contracts, financial statements, and memos.

Organization Chart

A chart depicting the roles, divisions, or duties within an organization and how they relate to each other.

Flowchart

Process diagram that illustrates a sequence of events from start to finish.

Bubble Diagram

Chart that expands the scatter diagram idea to three variables, with the size of the bubble representing the third variable.