The Fed Buys Securities and Gives the Bank a Check

question 11

Multiple Choice

The Fed buys securities and gives the bank a check for the amount. After the check has cleared,

• A) reserves remain unchanged because the increase of reserves at the bank are offset by an increase in reserves at the Fed.
• B) reserves have decreased by the amount of the check because the Fed pays for the check by decreasing the bank's deposits at the Fed.
• C) reserves have increased by the amount of the check because the Fed pays for the check by increasing the amount of the bank's deposits with the Fed.
• D) reserves have increased by the amount of the reserves multiplied by the required reserve ratio, and the quantity of money increases by the difference between the amount of the check and the increase in the reserves.

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Definitions:

Overlap

The extent to which two or more groups or distributions share common elements or regions.

Frequency Distribution

A summary of how often different values occur within a dataset, often represented in a table or graph.

Interval Data

Interval data is a type of quantitative data where the intervals between values are meaningful, but there is no true zero point, allowing for the measurement of differences but not relative sizes or ratios.

Series

The sum of a sequence of terms in a specific order, often related to mathematical or statistical analysis.