If the Fed Buys $1 Million in Government Securities from Bank

question 157

Multiple Choice

If the Fed buys $1 million in government securities from Bank A, then the immediate effect of this transaction is an increase in:

• A) Money supply M1
• B) Bank A's excess reserves
• C) Bank A's liabilities
• D) Bank A's required reserves

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Definitions:

Security Risk

A term indicating a potential threat to the safety or stability of an organization, system, or nation.

Alcoholics

Individuals who suffer from alcoholism, a chronic disease characterized by uncontrolled drinking and a preoccupation with alcohol.

HUAC Witch Hunts

Refers to the activities undertaken by the House Un-American Activities Committee (HUAC) during the late 1940s and 1950s to uncover and investigate alleged disloyalty and subversive activities on the part of private citizens and public employees.

CIO

The Congress of Industrial Organizations, a federation of unions that organized workers in industrial unions in the United States and Canada from 1935 until its merger with the AFL in 1955.