An Open Market Sale of Securities by the Fed

question 74

Multiple Choice

An open market sale of securities by the Fed

• A) decreases banks' reserves and increases banks' securities.
• B) increases banks' reserves and decreases banks' securities.
• C) increases banks' total assets.
• D) involves a bank selling government securities to the Fed.

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Definitions:

Investment Income

Income earned from investments, including dividends, interest, and capital gains from securities, real estate, or other assets.

Deferral Method

An accounting practice where certain revenues or expenses are deferred to a future accounting period to better match revenues with expenses.

Deferred Contribution

Refers to contributions or payments that are postponed to a future date rather than being made immediately.

Net Assets

The total assets of a company or organization minus its total liabilities; an indicator of financial health.