If the Fed Purchases Government Securities from Commercial Banks,the Reserves

question 154

Multiple Choice

If the Fed purchases government securities from commercial banks,the reserves of the banking system will immediately

• A) increase by the amount of the purchase.
• B) increase by more than the amount of the purchase.
• C) remain constant.
• D) decrease by the amount of the purchase.
• E) decrease by more than the amount of the purchase.

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Definitions:

Day-To-Day Operations

Involves the regular, routine activities necessary for a business or organization to function efficiently.

Partnership Debts

Financial obligations that are the responsibility of a business partnership, to be repaid from the partnership's assets.

Ratification

The act of officially approving or confirming an action or decision, usually after the fact, which might not have been initially authoritative or agreed upon.

Apparent Authority

Apparent authority refers to a situation where a third party is led to believe that an agent has the right to act on behalf of a principal, regardless of whether this is true.