When the Fed Sells $100 Million of Securities to a Commercial

question 173

Multiple Choice

When the Fed sells $100 million of securities to a commercial bank,the

• A)monetary base increases.
• B)money supply increases.
• C)bank's reserves decrease.
• D)required reserve ratio decreases.
• E)bank's reserves do not change.

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Definitions:

Recessionary Period

A phase in the economic cycle where there is a slowdown in economic activity, marked by reduced spending and increased unemployment.

Employee Layoffs

The act of temporarily or permanently terminating a group of employees from their jobs, often due to economic downturns, business restructuring, or organizational changes.

Inputs

The resources, materials, and effort required to produce goods or services in any organizational or production process.

Outputs

The results or products that come from the process of inputting resources like labor and capital into a production or activity system.