When a Commercial Bank Borrows from the Fed

question 127

Multiple Choice

When a commercial bank borrows from the Fed,

• A) the reserves of the bank fall.
• B) the bank can make more loans.
• C) it must be because the bank is not meeting its reserve requirements.
• D) the money supply falls.

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Definitions:

Sugar Act

A British law enacted in 1764 that imposed a tax on sugar and molasses imported into the American colonies, leading to widespread discontent.

Writs of Assistance

Legal documents that served as general search warrants enabling British officials to search homes and businesses for smuggled goods in colonial America.

Regulators

Groups of backcountry Carolina settlers who protested colonial policies.