When the Fed Conducts Open-Market Purchases

question 23

Multiple Choice

When the Fed conducts open-market purchases,

• A)banks buy Treasury securities from Fed,which increases the money supply.
• B)banks buy Treasury securities from the Fed,which decreases the money supply.
• C)it buys Treasury securities,which increases the money supply.
• D)it buys Treasury securities,which decreases the money supply.

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Definitions:

Current Cost

The cost that would be incurred to replace an asset or to purchase an equivalent asset at the current time.

Management Discretion

The degree of flexibility and judgement allowed to managers in making decisions and choices impacting the company's operations and performance.

FIFO

An inventory valuation method where the first items placed into inventory are the first ones sold (First In, First Out).

LIFO

Stands for Last In, First Out, an inventory valuation method which assumes that the last items placed in inventory are sold first.