Which of the Following Best Describes What Occurs When Monetary

question 233

Multiple Choice

Which of the following best describes what occurs when monetary authorities sell government securities?

• A)There is a decrease in the size of chartered banks' excess reserves, the money supply increases, and interest rates fall, thereby causing a decrease in investment spending and real GDP.
• B)There is a decrease in the size of chartered banks' excess reserves, the money supply decreases, and the interest rates rise, thereby causing a decrease in investment spending and real GDP.
• C)There is a decrease in the size of chartered banks' excess reserves, the money supply decreases, and interest rates rise, thereby causing an increase in investment spending and real GDP.
• D)There is an increase in the size of chartered bank reserves, the money supply increases, and interest rates fall, thereby causing an increase in investment spending and real GDP.

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Definitions:

Shareholder Theory

The belief that the primary responsibility of a corporation is to maximize the wealth of its shareholders.

Utilitarianism

A philosophical theory that suggests the best action is the one that maximizes utility, usually defined as that which produces the greatest well-being of the greatest number of people.

Toxic Environment

Conditions in a workplace or other environment that are harmful to employees' or inhabitants' health, well-being, or performance, often due to dangerous chemicals or a hostile work culture.

Whistleblowing

The act of exposing wrongful, unethical, or illegal activities within an organization to those in authority or the general public.