If the Federal Reserve Conducts an Open-Market Purchase, Bank Reserves

question 281

Multiple Choice

If the Federal Reserve conducts an open-market purchase, bank reserves _____ and the money supply _____.

• A)decrease; decreases
• B)increase; increases
• C)decrease; increases
• D)increase; decreases

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Definitions:

T-statistic

A type of statistic used in hypothesis testing, particularly in situations dealing with small sample sizes or unknown standard deviations, to determine if there is a significant difference between two sets of data.

Null

Often refers to a value of zero in various contexts, such as null pointers in programming or null hypotheses in statistics.

Alpha

A threshold level used in statistics to determine the significance of results, often set at 0.05 or 5%.

Critical Value

A threshold in hypothesis testing that determines whether to reject the null hypothesis, based on the distribution of a test statistic.