When a Bank Buys Government Securities from the Fed, Then

question 4

True/False

When a bank buys government securities from the Fed, then the bank's ability to "create money" will be reduced.

---

Definitions:

Physical Events

Occurrences in the natural world that involve matter and energy, observable through the senses or scientific instruments.

Classical Conditioning

An educational technique in which two stimuli are repeatedly associated; a reaction initially caused by the second stimulus is ultimately triggered by only the first stimulus.

Pavlov

Ivan Pavlov, a Russian physiologist known for his work in classical conditioning, demonstrating how stimuli can trigger conditioned responses in animals.

UCR

Unconditioned Response; an automatic and natural response elicited by a stimulus without any prior learning or conditioning.