Consider a $2 Billion Open Market Purchase of U

question 101

Multiple Choice

Consider a $2 billion open market purchase of U.S. Treasury securities by the Federal Reserve. The Fed's balance sheet will show:

• A) only an increase in the asset of securities of $2 billion.
• B) only show an increase in the liability of reserves of $2 billion.
• C) no change in the size of the balance sheet, just the composition of assets will change from cash to securities.
• D) an increase in the asset category of securities and the liability category of reserves by $2 billion.

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Definitions:

FICA Taxes Withheld

Amounts deducted from employees' paychecks to cover their portion of Social Security and Medicare taxes as required by the Federal Insurance Contributions Act.

Overtime Work

Hours worked by employees beyond their regular working hours, often compensated at a higher rate than their standard pay.

Gross Earnings

Gross Earnings refer to the total income earned by an individual or business before any deductions like taxes, contributions, and other withholdings.

Regular Hourly Wage

The fixed amount of monetary compensation that an employee earns per hour of work.