The Fed Increases Reserves If It Conducts Open Market

question 115

Multiple Choice

The Fed increases reserves if it conducts open market

• A)purchases or auctions term credit.
• B)purchases but not if it auctions term credit
• C)sales or auctions term credit
• D)sales but not if it auctions term credit

---

Definitions:

Physical Capital

The stock of tangible, non-financial assets that are used in the production of goods and services, such as machinery and buildings.

Opportunity Costs

The cost of an alternative that must be forgone in order to pursue a certain action, essentially what is sacrificed to choose one option over another.

Subsidies

Financial support provided by governments to individuals, organizations, or industries to encourage certain activities or reduce costs.

Comparative Advantage

The ability of an individual or country to produce a particular good or service at a lower opportunity cost than its competitors.