Which of the Following Best Describes What Occurs When Monetary

question 7

Multiple Choice

Which of the following best describes what occurs when monetary authorities sell government securities?

• A) There is a decrease in the size of commercial banks' excess reserves, the money supply increases, and interest rates fall, thereby causing a decrease in investment spending and real GDP
• B) There is a decrease in the size of commercial banks' excess reserves, the money supply decreases, and the interest rates rise, thereby causing a decrease in investment spending and real GDP
• C) There is a decrease in the size of commercial banks' excess reserves, the money supply decreases, and interest rates rise, thereby causing an increase in investment spending and real GDP
• D) There is an increase in the size of commercial bank reserves, the money supply increases, and interest rates fall, thereby causing an increase in investment spending and real GDP

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Definitions:

Skinner Box

A laboratory apparatus used to study animal behavior through controlled conditioning experiments, named after B.F. Skinner.

Operant Conditioning

A type of learning where behavior is controlled through consequences, including reinforcements or punishments, to increase or decrease the occurrence of behaviors.

Operant Conditioning

A behavioral modification process where the degree of an activity is transformed by gratification or corrections.

Reinforced

Strengthened or emphasized, especially in the context of behavior that is encouraged by rewards or positive outcomes.