If the Fed Sells $1 Billion of Short-Term Securities Issued

question 67

Multiple Choice

If the Fed sells $1 billion of short-term securities issued by the Bank of Japan and at the same time purchases $1 billion of short-term securities issued by the U.S. Treasury,

• A)the monetary base will decline by $1 billion.
• B)the monetary base will rise by $1 billion.
• C)the Fed has conducted an unsterilized foreign-exchange intervention.
• D)the Fed has conducted a sterilized foreign-exchange intervention.

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Definitions:

Purchasing Power

The financial ability to buy products and services, often linked to the amount of money an individual or population has.

Median Purchasing

The median level of expenditure on goods and services by a designated group or area, serving as a central tendency measure of consumption.

Poorest 25 Percent

The segment of a population that falls within the lowest quarter in terms of income level, often highlighted in discussions of economic inequality.

Education Level

The highest degree or level of school completed by an individual, which can significantly influence employment opportunities, income, and social status.