A Open Market Purchase of Government Securities by the Fed

question 297

Multiple Choice

A open market purchase of government securities by the Fed will cause which of the following?

• A) a reduction in the federal funds rate
• B) an increase in the amount of excess reserves that banks will wish to hold
• C) an increase in the equilibrium quantity of reserves
• D) all of the above

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Definitions:

Unearned Revenue

Money received by an entity for goods or services yet to be delivered or rendered, recognized as a liability until the obligation is fulfilled.

Adjusting Entries

Journal entries made at the end of an accounting period to update account balances before the preparation of financial statements.

Unbilled Consulting Revenue

Unbilled consulting revenue refers to earnings from consulting services that have been delivered but not yet invoiced to the client.

Depreciation

The process of methodically dividing the expense of a physical asset over its estimated useful life.