Which of the Following Will Happen When the Federal Reserve

question 354

Multiple Choice

Which of the following will happen when the Federal Reserve buys bonds from the public in the open market and the amount of cash held by the public does not change?

• A) The required reserve ratio will increase.
• B) The money supply will decrease.
• C) The deposits of commercial banks will decline.
• D) Commercial bank reserves will increase.

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Definitions:

Per Capita Income

The average income earned per person in a given area in a specified year, often used to measure economic well-being.

Demand

The total quantity of a good or service that consumers are willing and able to purchase at a given price in a given time period.

Cable Television

A system of delivering television programming to paying subscribers via radio frequency signals transmitted through coaxial cables or digital light pulses through fiber-optic cables.

Per Capita Income

A measure of the average income earned per person in a certain area, such as a country or city, calculated by dividing the area's total income by its population.