Which of the Following Fed Actions Increases the Excess Reserves

question 169

Multiple Choice

Which of the following Fed actions increases the excess reserves of commercial banks?

• A) Selling bonds to the public
• B) Selling bonds to commercial banks
• C) Increasing the discount rate
• D) Lower the reserve ratio

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Definitions:

Mutually Exclusive

Mutually exclusive describes a scenario where the occurrence of one event makes the occurrence of another impossible.

Unequal Lives

Refers to comparing projects or assets with different durations or expected lifetimes to make investment or capital budgeting decisions.

Equivalent Annual Annuity

A method used in capital budgeting to compare the profitability of investments with different lifespan by converting them into an equivalent annuity.

Net Present Value

The calculation that compares the value of a dollar today to the value of that same dollar in the future, taking inflation and returns into account.