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:

Gross Profit

The revenue a corporation retains after removing the costs related to the creation and sale of its products or the provision of its services.

Sales Discounts

Reductions in the amount due from a customer, offered as an incentive for early payment according to the sales terms.

Sales Returns

Transactions where customers return previously purchased merchandise, leading to a reversal of revenue.

Cost of Goods Sold

The specific costs incurred in the production of a company's sold merchandise.