Suppose the Fed Sells a $50,000 U

question 47

Multiple Choice

Suppose the Fed sells a $50,000 U.S.Treasury security to Martha,a member of the public.If Martha writes a check to the Fed in order to buy this security,the money in her checking account will be transferred to

• A) the Fed,and now the Fed will have $50,000 more in reserves than it had before.
• B) her bank,and now her bank will have $50,000 more in reserves than it had before.
• C) the Fed,and now it is as if the money doesn't exist.
• D) the Treasury,and now the Treasury will have $50,000 more in reserves than it had before.

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Definitions:

Segmented Income Statement

An income statement that divides data by segment, department, or product line to analyze each segment's financial performance.

Contribution Format

A form of income statement where costs are divided into variable and fixed categories, highlighting the contribution margin of products.

Common Fixed Expenses

Expenses that do not change with the level of production or sales and are shared by multiple products or departments within a company.

Absorption Costing

An accounting method that integrates all components of manufacturing expenses—materials, labor, and every overhead, be it variable or fixed—into the final product cost.