When the Fed Buys a U

question 83

Multiple Choice

When the Fed buys a U.S. bond in the open market

• A) its action has no effect on the total reserves or the money supply because the check it writes increases reserves at one bank but they fall at another.
• B) total reserves increase by the amount of the purchase but the money supply stays the same.
• C) its action expands total reserves and the money supply.
• D) its action contracts total reserves and the money supply.

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Definitions:

Neuroticism

A personality trait characterized by a tendency to experience negative emotions such as anxiety, anger, or depression more frequently and intensely than others.

Openness to Experience

A personality trait typified by a willingness to try new things, creativity, curiosity, and an appreciation for art and beauty.

Big Five Traits

A psychological framework that characterizes human personality via five wide-ranging traits: openness, conscientiousness, extraversion, agreeableness, and neuroticism.

Factor Analysis

A statistical method used to identify underlying variables, or factors, that explain the pattern of correlations among multiple variables.