Suppose the Fed Sells $100 of Government Securities

question 255

Multiple Choice

Suppose the Fed sells $100 of government securities.If the desired reserve ratio is 20 percent and there is no currency drain,then the quantity of money

• A)decreases by $100.
• B)decreases by $500.
• C)decreases by $400.
• D)increases by $100.
• E)decreases by $80.

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Definitions:

Misconduct

Improper or unlawful behavior by a person in a position of authority or trust.

Risks

The potential for loss, damage, or any other undesirable outcome resulting from internal or external vulnerabilities.

Joint Venture

A business arrangement where two or more parties agree to pool their resources for the purpose of accomplishing a specific task or business activity.

Syndicate

A group of individuals or organizations combined to promote some common interest, often in business or finance.