A Decrease in the Quantity of Reserves Held by Commercial

question 381

Multiple Choice

A decrease in the quantity of reserves held by commercial banks could be the result of

• A) a decision by U.S. households to hold less currency.
• B) the sale of government securities by the Federal Reserve.
• C) a decrease in the government's budget deficit.
• D) an increase in the exchange rate.

---

Definitions:

Utility Function

A mathematical representation in economics of how a consumer's preferences correspond to the consumption of goods and services.

Endowed

Possessing a particular resource, asset, or attribute, either naturally or through a transfer, such as being given a sum of money or property.

Bromides

Compounds containing a bromine ion or a derivative thereof; in colloquial usage, a bromide is a commonplace or boring statement intended to placate or pacify.

Platitudes

Often overused statements or remarks that are intended to convey moral or practical truths, but are perceived as lacking in originality or sincerity.