When the Fed Buys Government Securities in the Open Market

question 160

Multiple Choice

When the Fed buys government securities in the open market, it:

• A) Decreases the excess reserves of the banking system, reducing excess reserves for overnight loan in the Federal funds market, thus lowering the Federal funds rate
• B) Increases the excess reserves of the banking system, reducing excess reserves for overnight loan in the Federal funds market, thus lowering the Federal funds rate
• C) Decreases the excess reserves of the banking system, reducing excess reserves for overnight loan in the Federal funds market, thus increasing the Federal funds rate
• D) Increases the excess reserves of the banking system, raising excess reserves for overnight loan in the Federal funds market, thus lowering the Federal funds rate

Recognize logical fallacies and reasoning in the context of psychological explanations.

Understand the application of classical conditioning principles in various contexts, including legal systems and experimental settings.

Understand and calculate standard deviations, covariances, and correlation coefficients for investment returns.

Comprehend the principles of designing risky portfolios, including the calculation of expected returns and optimal risky portfolio proportion.

---

Definitions:

Directness

The quality of being straightforward and clear in communication without any evasion or ambiguity.

Indirectness

A communication approach where the speaker's intentions are implied rather than explicitly stated.

Pacing

The skill of adjusting one's speed or level of effort to match the situation or the behaviors of others.

Wage Gap

The disparity or difference in the earnings of individuals, often discussed in the context of the gender wage gap, where there is a noticeable pay difference between men and women.