If the Reserve Requirement for Banks Is Fixed at 10

question 43

Multiple Choice

If the reserve requirement for banks is fixed at 10% and the Fed wishes to decrease the money supply by $500 billion,what type of open market operation should the Fed undertake?

• A) Sell $55.56 billion in government securities
• B) Purchase $55.56 billion in government securities
• C) Sell $50.00 billion in government securities
• D) Purchase $50.00 billion in government securities

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Definitions:

Demand Forecasts

are predictions about future consumer demand for products or services, based on historical data, market trends, and analysis, used for planning purposes.

Consumer Demand

Consumer demand refers to the desire and ability of purchasers to acquire goods or services at a given price.

Supply Chain

The entire network of entities, directly or indirectly, fulfilling customer requests, including manufacturers, suppliers, transporters, warehouses, retailers, and customers themselves.

Variability

The lack of consistency or the tendency to vary, especially in the context of supply chain, leading to challenges in predicting demand, lead times, and inventory levels.