Which of the Following Will Happen When the Federal Reserve

question 354

Multiple Choice

Which of the following will happen when the Federal Reserve buys bonds from the public in the open market and the amount of cash held by the public does not change?

• A) The required reserve ratio will increase.
• B) The money supply will decrease.
• C) The deposits of commercial banks will decline.
• D) Commercial bank reserves will increase.

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Definitions:

Counteroffer

An offer made in response to another offer, rejecting the original offer and presenting new terms for an agreement.

Option

A separate contract in which an offeror agrees not to revoke her offer for a stated period of time in exchange for some valuable consideration.

Reasonable Time

A period that is fair and appropriate given the circumstances, often used in contracts to define a period for the performance of an obligation.

Subjective Approach

A perspective or method that relies on personal opinions, interpretations, feelings, or tastes, rather than objective or external facts.