Suppose That the Fed Undertakes an Open Market Purchase of $5

question 97

Multiple Choice

Suppose that the Fed undertakes an open market purchase of $5 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)$4.17 million
• B)$7.95 million
• C)$5.68 million
• D)$41.67 million

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Definitions:

Cronbach's Alpha

A coefficient of reliability or internal consistency of a psychometric instrument, indicating how well the items in the test measure the same concept or construct.

Internal Consistency Reliability

A measure of how well the items on a test measure the same concept or construct, often assessed by Cronbach's alpha.

Parallel Forms Reliability

The consistency of the results of two tests constructed in the same way from the same content domain.

Internal Validity

The extent to which a study establishes a trustworthy cause-and-effect relationship between a treatment and an outcome.