If the Federal Reserve Bank Engages in Open Market Operations

question 25

Multiple Choice

If the Federal Reserve Bank engages in open market operations, it actually is:

• A) buying and selling stocks on the stock market.
• B) changing the reserve requirement that banks must meet.
• C) buying and selling government bonds in the secondary bond markets.
• D) printing paper currency to add to bank reserves.

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Definitions:

Accumulated Depreciation

The total amount of depreciation expense that has been recorded against a fixed asset over its useful life, reducing its book value.

Fixed Asset

Long-term tangible property or equipment that a firm owns and uses in its operations to generate income, typically not expected to be converted to cash within a year.

Fixed Asset Turnover

A ratio that measures a company's ability to generate sales from its fixed-assets investments such as property, plant, and equipment.

Generating Sales

The process of creating revenue for a business through activities such as marketing, sales calls, and customer service.