The Federal Reserve Will Engage in Open Market Operations When

question 70

Multiple Choice

The Federal Reserve will engage in open market operations when

• A) it wants to punish private banks because they are not keeping the required level of reserves.
• B) it wants to change the money supply.
• C) it wants to change the reserve ratio.
• D) it wants to increase the total amount of reserves since government securities are considered a reserve.

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Definitions:

Gross Profit

The profit a company makes after deducting the costs associated with making and selling its products, or the costs associated with providing its services.

Net Sales

The total revenue generated from goods or services sold, after deducting returns, allowances for damaged or missing goods, and discounts.

Cost of Goods Sold

Direct costs attributable to the production of the goods sold by a company, including materials and labor costs.

Merchandise Inventory

Goods that a retail or wholesale company intends to sell to customers. The inventory account is adjusted based on purchases and sales.