When the Federal Reserve Sells a Government Security to a Commercial

question 73

Multiple Choice

When the Federal Reserve sells a government security to a commercial bank

• A) the cash reserves of the commercial bank decrease.
• B) the net worth of the commercial bank increases.
• C) the loans of the commercial bank will increase.
• D) the balance sheet of the commercial bank is thrown off balance.

---

Definitions:

Cash Disbursements

The total payments made by a business for various purposes, including expenses, purchases, and debt repayment.

Operating Expenses

Ongoing expenses incurred in the normal operations of a business, including rent, utilities, salaries, and marketing costs, but excluding the cost of goods sold.

Sales Budget

A detailed projection of future sales, often broken down by product line, region, or sales channel, that guides business planning.

Quarterly Sales

The total revenue generated from the sale of goods or services within a three-month period.