When the Fed Sells Securities, the Total Funds of Commercial

question 49

Multiple Choice

When the Fed sells securities, the total funds of commercial banks ____ by the market value of securities sold by the Fed. This activity initiated by the FOMC's policy directive is referred to as a ____ of money supply growth.

• A)increase; loosening
• B)decrease; loosening
• C)increase; tightening
• D)decrease; tightening
• E)none of the above

---

Definitions:

Willingness to Pay

The maximum amount an individual or organization is willing to spend to acquire a good or service.

Consumer Surplus

The discrepancy between the financial amount consumers intend to spend on a good or service and the amount they end up spending.

Peanuts

A legume crop grown mainly for its edible seeds, which are high in protein, fat, and various healthy nutrients.

Firm's Willingness

Firm's willingness refers to a company's readiness or inclination to engage in certain activities, such as investing, producing, or changing pricing strategies, based on expected outcomes.