Which One of the Following Statements Is Most Correct

question 10

Multiple Choice

Which one of the following statements is most correct?

• A) Any central bank purchase of assets automatically results in an increase in the domestic money supply, while any central bank sale of assets automatically causes the money supply to decline.
• B) Any central bank purchase of assets results in an increase in the domestic money supply, while any central bank sale of assets causes the money supply to decline.
• C) Any central bank purchase of assets automatically results in a decrease in the domestic money supply, while any central bank sale of assets automatically causes the money supply to decline.
• D) Any central bank purchase of assets automatically results in a decrease in the domestic money supply, while any central bank sale of assets automatically causes the money supply to increase.
• E) Any central bank purchase of assets automatically results in an increase in the domestic money supply, while any central bank sale of assets does not necessarily affect the money supply.

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Definitions:

Common Stock

Represents equity ownership in a corporation, giving holders voting rights and a share in the company's profits through dividends.

Paid-In Capital

The total amount of capital that shareholders have directly contributed to a company through the purchase of its shares.

Shares of Par

Units of ownership in a corporation at the nominal or face value defined in the corporate charter, typically used in the context of par value shares.

National Securities

Financial instruments issued by a government to finance its activities, often including bonds and treasury notes.