When the Federal Reserve Sells a Government Security to a Bond

question 46

Multiple Choice

When the Federal Reserve sells a government security to a bond dealer, which transmits payment from a transactions deposit account at a bank

• A) the cash of the Federal Reserve will decrease.
• B) the net worth of the commercial bank will decrease.
• C) the loans of the commercial bank will increase.
• D) the money supply will decrease.

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Definitions:

Terms of Sale

The conditions under which a seller will complete a sale, typically detailing payment terms, delivery times, and warranties.

Sales Tax

Sales tax is a tax levied by governments on the sale of goods and services, typically calculated as a percentage of the sales price.

General Journal Entry

A record of financial transactions in the order in which they occur, used as the basis for all other financial reports.

Sales Tax

A government-imposed charge on the sale of goods and services.