If the Fed Carries Out an Open Market Operation and Buys

question 82

Multiple Choice

If the Fed carries out an open market operation and buys U.S.government securities, the federal funds rate ________ and the quantity of reserves ________.

• A) falls; increases
• B) rises; increases
• C) falls; decreases
• D) rises; does not change
• E) rises; decreases

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Definitions:

Accumulated Depreciation

The cumulative depreciation of an asset up to a single point in its life, reflecting its loss of value over time.

Withdrawals Account

An account used to record the amounts taken out of a business by its owner(s) for personal use.

Capital Balance

The amount of money invested in a company by its owners or shareholders, represented in the equity section of the balance sheet.

Accounting Period

The span of time at the end of which a company's financial performance is measured and reported.