When the Fed Sells Securities, the Total Funds of Commercial

question 42

Multiple Choice

When the Fed sells securities, the total funds of commercial banks ____ by the market value of the securities sold by the Fed. This activity initiated by the FOMC's policy directive is referred to as a ____ of money supply growth.

• A)increase; loosening
• B)decrease; loosening
• C)increase; tightening
• D)decrease; tightening
• E)None of these are correct.

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Definitions:

Dissenters

Individuals who express opinions that are at variance with those previously, commonly, or officially expressed.

Conformity

The tendency of individuals to adjust their behaviors, attitudes, and beliefs to match those of the group or social norms.

Cognitive Dissonance

The mental discomfort experienced by a person who holds two or more contradictory beliefs, ideas, or values at the same time.

Referent Informational Influence

A form of social influence where individuals conform to the behavior of a group they admire or relate to, in order to be accepted or to identify with the group.