Assume That the Reserve Requirement Is 20% and the Federal

question 42

Multiple Choice

Assume that the reserve requirement is 20% and the Federal Open Market Committee buys a $100,000 bond. The money supply

• A) increases by a maximum of $100,000.
• B) decreases by $100,000.
• C) increases by a maximum of $20,000.
• D) increases by a maximum of $500,000.

---

Definitions:

Direct Investment

The purchase or acquisition of a controlling interest in foreign assets, businesses, or real estate, typically involving a significant level of influence or management.

Film-manufacturing Facility

A specialized industrial site or factory where raw materials are transformed into photographic film or related media for photography and cinematography.

3M Inc.

A multinational conglomerate corporation known for products like adhesives, abrasives, and laminates, among others.

Department of Commerce

A department of the government responsible for promoting economic growth, supporting job creation, and improving the living standards of citizens through various policies and initiatives.