If the Fed Purchases $1 Million in Securities from the Nonbank

question 48

Multiple Choice

If the Fed purchases $1 million in securities from the nonbank public, the monetary base will rise by $1 million

• A)if the public holds the proceeds as currency.
• B)if the public deposits the proceeds as checkable deposits.
• C)if the public deposits the proceeds with the Treasury in a monetary base account.
• D)whether the public holds the proceeds as currency or deposits them as checkable deposits.

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Definitions:

Marginal Social Cost

The cost to society of producing one additional unit of a good or service, including both the private costs and any external costs.

Oil Refinement

The process of transforming crude oil into useful products like gasoline, diesel, and jet fuel through various physical and chemical treatments.

Pollution Fee

A financial charge applied to entities that emit pollutants, intended to discourage environmental pollution by making it economically costly.

Marginal External Cost

The cost imposed on a third party by the production of an additional unit of a good or service.