The Purchase of Government Securities from the Public by the Fed

question 326

Multiple Choice

The purchase of government securities from the public by the Fed will cause

• A) commercial bank reserves to decrease.
• B) the money supply to increase.
• C) demand deposits to decrease.
• D) the interest rate to increase.

---

Definitions:

Tariff Barrier

Taxes imposed on imported goods and services to restrict imports, protect domestic industries, or raise government revenue.

Licensing Agreement

A legal contract by which a rights holder permits another party to use a property, such as intellectual property or technology, under specified conditions.

Foreign Corrupt Practices Act

A U.S. law that prohibits American companies and individuals from bribing foreign officials to retain or obtain business.

Countertrade

A form of international trade in which goods or services are exchanged directly for other goods or services without using a medium of exchange, such as money.