Which of the Following Statements Is Most Correct

question 67

Multiple Choice

Which of the following statements is most correct?

• A) Open-market operations always lead to an immediate increase in the volume of lending; this is especially true when bonds are sold to restrict deposit growth.
• B) Open-market operations don't always lead to an immediate change in the volume of deposits; this is especially true when bonds are purchased to expand deposit growth.
• C) Open-market operations always lead to an immediate change in the volume of deposits; this is especially true when bonds are sold to restrict deposit growth.
• D) Open-market operations don't always lead to an immediate change in the volume of deposits; this is especially true when bonds are sold to restrict deposit growth.

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Definitions:

Liquidity Preference Theory

A theory suggesting that people prefer to hold their wealth in liquid form for convenience and as a precaution against uncertainty, affecting interest rates.

Yield Curve

A graphical representation of interest rates on debt for a range of maturities, often used as an indicator of economic expectations and interest rate trends.

Normal

Typically refers to something that conforms to a standard or common pattern; in statistics, a distribution that is symmetrically clustered around its mean.

Treasury Bond

A long-term, fixed-interest government debt security with a maturity of more than ten years.