What Kind of Fed Activity Is Likely to Be Evident

question 7

Multiple Choice

What kind of Fed activity is likely to be evident when the Fed desires to drain reserves out of the banking system and underscore a policy move toward restraint?

• A)No Fed buying or selling is likely to occur.
• B)The Fed is likely to use reverse repurchase agreements.
• C)The Fed is likely to engage in system repurchase agreements.
• D)The Fed is likely to engage in outright sales.

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Definitions:

Credit Balance

Indicates the amounts credited on the right side of the balance sheet, usually representing liabilities, revenue, or equity.

T Account

A graphical representation of a ledger account, used in accounting to depict debits and credits for a specific account.

Debit Side

refers to the left-hand side of a ledger account that records increases in assets, expenses, and decreases in liabilities and equity.

Credit Side

The right side of an account in double-entry bookkeeping, typically used to record increases in liabilities, revenue, or equity.