Which of the Following Fed Actions Increases the Excess Reserves

question 186

Multiple Choice

Which of the following Fed actions increases the excess reserves of commercial banks?

• A) selling bonds to the public
• B) selling bonds to commercial banks
• C) increasing the discount rate
• D) lowering the reserve ratio

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Definitions:

Purchases of Services

Transactions where buyers acquire services rather than tangible goods from sellers.

Net Exports Component

The difference between a country's total exports of goods and services and its total imports, part of the gross domestic product calculation.

Consumption Component

The part of total economic output that is used by individuals and households for personal needs and wants.

Additions to Inventory

Increases in the quantity of goods held by a company during a particular period, often for future sale or production use.