An Open Market Sale Leads to an Expansion of Reserves

question 81

True/False

An open market sale leads to an expansion of reserves and deposits in the banking system and hence to a decline in the monetary base and the money supply.

---

Definitions:

Demand Equation

A formula that calculates the amount of a product consumers are willing to buy based on its price, income levels, and taste and preferences among other factors.

Supply Equation

A mathematical representation showing the relationship between the quantity of goods suppliers are willing to produce and various influencing factors like price and production costs.

Per-Unit Tax

A tax imposed on a product based on a fixed amount for each unit sold, affecting the supply curve by increasing the cost of production.

Units Sold

The number of individual items or products that have been sold over a specific period.