When the Fed Buys a U

question 83

Multiple Choice

When the Fed buys a U.S. bond in the open market

• A) its action has no effect on the total reserves or the money supply because the check it writes increases reserves at one bank but they fall at another.
• B) total reserves increase by the amount of the purchase but the money supply stays the same.
• C) its action expands total reserves and the money supply.
• D) its action contracts total reserves and the money supply.

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Definitions:

Generalization

The process by which the brain applies previous learning to new situations that are similar but not identical.

Instrumental Learning

also known as operant conditioning, is a method of learning that occurs through rewards and punishments for behavior.

Response Strength

The intensity or likelihood of a particular behavioral response, often influenced by past experiences or reinforcement.

Instrumental Learning

A learning process in which behavior is modified by the reinforcing or inhibitory effects of the resulting consequences.