When the Fed Conducts an Open Market Operation by Purchasing

question 157

Multiple Choice

When the Fed conducts an open market operation by purchasing securities from a bank,

• A) public holdings of securities increase.
• B) the bank's deposits increase but its reserves do not change.
• C) the bank's deposits increase but its reserves decrease.
• D) the bank's reserves increase.

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Definitions:

Fact

A statement that can be proven true or false based on evidence or reality.

Research Observations

The process of systematically watching, recording, and analyzing behaviors or phenomena in a study to gather data.

Hypothesis

An “if-then” statement that follows logically from a theory and specifies how certain variables should be related to each other if the theory is correct.

Stereotype Threat

A situational predicament in which individuals are at risk of confirming negative stereotypes about their social group.