Here Is How an Open Market Purchase Works: the Fed

question 46

Multiple Choice

Here is how an open market purchase works: The Fed __________ government securities to (from) a commercial bank,which raises the bank's deposits at the __________ and increases the bank's __________.

• A) sells; Fed; reserves
• B) buys; Fed; reserves
• C) buys; Treasury; discount loans
• D) sells; Treasury; required reserve ratio
• E) buys; Fed; liabilities

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Definitions:

Spectrum

A range of values or conditions, often specifically pertaining to the distribution of energy emitted or absorbed by a substance, visible in bands of colors or intensities.

IR Spectroscopy

A technique used in analytical chemistry to identify molecular structure through the absorption of infrared radiation by molecules, leading to vibrational and rotational changes.

Electronegativity

A measure of the tendency of an atom to attract a bonding pair of electrons towards itself in a molecule.

Frequency

The number of occurrences of a repeating event per unit time.