If the Fed Buys $100 in Securities from a Commercial

question 483

Multiple Choice

If the Fed buys $100 in securities from a commercial bank, the

• A) Fed's assets will decrease by $100.
• B) quantity of money will decrease by $100.
• C) quantity of the bank's reserves will increase by $100.
• D) amount of the bank's reserves will not change.

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Definitions:

Non-Controlling Interest

The equity in a subsidiary not attributable, directly or indirectly, to a parent company.

Consolidated Shareholders' Equity

This is the total equity owned by shareholders as reported in the consolidated financial statements of a parent company and its subsidiaries.

Equity Method

An accounting technique used to record investments in which the investor has significant influence over the investee, typically through owning a large percentage of its stock.

Cost Method

An accounting method used to value an investment, based on the cost to acquire it plus any additional investments or deducting any reductions.