If the Fed Purchases Government Securities from Bank A,__________ in the Banking

question 141

Multiple Choice

If the Fed purchases government securities from Bank A,__________ in the banking system __________ and the money supply __________.

• A) reserves; fall; falls
• B) reserves; rise; falls
• C) reserves; rise; rises
• D) excess reserves; fall; rises
• E) excess reserves; rise; falls

---

Definitions:

Equilibrium Price

The market price at which the quantity of goods supplied equals the quantity of goods demanded.

Supply Curve

A graphical representation of the relationship between the price of a good and the quantity of that good that suppliers are willing and able to supply.

Demand Curve

A graph showing the relationship between the price of a good and the quantity of the good that consumers are willing to purchase.

Price Ceiling

A cap established by the government on the maximum price that can be set for a good, service, or resource.