When the Fed Conducts an Open Market Operation by Purchasing

question 157

Multiple Choice

When the Fed conducts an open market operation by purchasing securities from a bank,

• A) public holdings of securities increase.
• B) the bank's deposits increase but its reserves do not change.
• C) the bank's deposits increase but its reserves decrease.
• D) the bank's reserves increase.

Explain the concept of reserve requirements and how it affects bank lending capabilities.

Identify the role of banks in creating money through the lending process.

Recognize the importance of liquidity for banks and the impact of liquid assets on bank operations.

Explain the relationship between loans and deposits in the banking system.

---

Definitions:

Groups Rather

A way of referring to the preference or tendency to achieve objectives or conduct activities in groups rather than individually.

Rapid Career Growth

The process of quickly advancing in one's career, often characterized by frequent promotions, increased responsibilities, or significant skill development.

Flexibility

The ability to adapt to changes, challenges, or new requirements with ease and minimal disruption.

Cultural Distance

Refers to the difference in cultural values and beliefs between countries or societies, affecting international business operations and interactions.