All Else the Same,when the Fed Calls in a $100

question 179

Multiple Choice

All else the same,when the Fed calls in a $100 discount loan previously extended to the First National Bank,reserves in the banking system

• A)increase by $100.
• B)increase by more than $100.
• C)decrease by $100.
• D)decrease by more than $100.

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Definitions:

Simple Interest

Simple interest is a method of calculating interest where the interest charge is computed only on the original principal, and not on the interest accrued over time.

Account

A record or statement that reflects the financial transactions and their effect on an asset, liability, equity, revenue, or expense.

Regression Equation

A mathematical formula that describes the relationship between one dependent variable and one or more independent variables.

Y′

A symbol often representing a predicted value or derivative in mathematical equations or models.