If the Fed Purchases $50,000 in T-Bills from a Bank,by

question 66

Multiple Choice

If the Fed purchases $50,000 in T-bills from a bank,by how much will the bank's excess reserves increase?

• A) by $50,000
• B) by $50,000 times the required reserve ratio
• C) by $50,000 divided by the required reserve ratio
• D) Not enough information has been provided to answer the question.

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Definitions:

Ownership

The legal right or state of having control over something, such as property or a business.

Commercial Paper

An unsecured, short-term debt instrument issued by corporations, typically for the financing of accounts receivable and inventories.

Short-Term Financing

Funding obtained for a period of one year or less, used to cover immediate needs such as working capital requirements.