Suppose That the Fed Undertakes an Open Market Purchase of $25

question 3

Multiple Choice

Suppose that the Fed undertakes an open market purchase of $25 million worth of securities from a bank.If the required reserve ratio is 9%,what is the resulting change in checkable deposits (or the money supply) ,assuming that there are no cash leakages and that banks hold zero excess reserves?

• A) $277.8 million
• B) $225 million
• C) $28 million
• D) $34 million

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Definitions:

Aversive Conditioning

A psychological process of learning involving the use of unpleasant stimuli to stop or change unwanted behaviors.

Unpleasant Consequences

Negative outcomes or penalties that follow undesired actions or behaviors, often used as deterrents.

Behavior Therapy

A therapeutic approach focused on changing negative behaviors into positive ones through reinforcement and conditioning techniques.

Undesired Behavior

Behavior that is considered unacceptable or inappropriate by society, an individual, or a specific group.