When the Fed Sells a Government Security to the Public

question 35

Multiple Choice

When the Fed sells a government security to the public, how does it usually receive payment for the security?

• A)By accepting checks on bank accounts
• B)By drawing money out of circulation
• C)By decreasing member bank profits not distributed by the Fed
• D)By decreasing reserves in bank accounts at the Fed

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Definitions:

Depreciation

The methodical distribution of the expense of a physical asset throughout its lifespan, indicating the decrease in its value as time passes.

Asset

An economic resource owned or controlled by an individual or organization that is expected to produce future benefits.

Provide Services

The act of performing tasks or duties for customers or clients in exchange for compensation.

Operating Expenses

Operating expenses are the costs associated with running a company's day-to-day activities, excluding the cost of goods sold.