Suppose the Fed Buys $5,000 of U

question 141

Multiple Choice

Suppose the Fed buys $5,000 of U.S.Treasury bonds from Donald Trump.If the reserve requirement is 25 percent,the currency holdings of the public are unchanged,and banks have zero excess reserves both before and after the transaction,the total impact on the money supply will be a

• A)increase by $5,000.
• B)increase by $20,000.
• C)decrease by $5,000.
• D)decrease by $20,000.

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Definitions:

Right-Skewed

A description of a distribution of data where the tail on the right side of the histogram is longer or fatter than the left side, indicating that the mean is greater than the median.

Standard Deviation

A measure of the amount of variation or dispersion of a set of values, indicating how much the values in the data set deviate from the mean.

Mean

A measure of central tendency that is calculated by dividing the sum of all values in a dataset by the number of values.

Right-Skewed

Refers to a distribution where the tail on the right side of the histogram is longer or fatter than the left side.