Suppose That the Fed Undertakes an Open Market Purchase of $15

question 168

Multiple Choice

Suppose that the Fed undertakes an open market purchase of $15 million worth of securities from a bank.If the required reserve ratio is 12%,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) $180 million
• B) $12.5 million
• C) $18 million
• D) $125 million

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Definitions:

Watson and Colleagues

This term likely refers to the team of researchers and psychologists associated with John B. Watson, the founder of behaviorism.

EFT

Emotional Freedom Techniques; a form of counseling intervention that draws on various theories of alternative medicine including acupuncture, neurolinguistic programming, energy medicine, and Thought Field Therapy.

CBT

Cognitive Behavioral Therapy; a psychotherapeutic approach that addresses dysfunctional emotions, behaviors, and cognitions through goal-oriented procedures.

Attachment Bond

A deep and enduring emotional connection that an infant forms with a caregiver, influencing their social, emotional, and cognitive development.