When the Fed Buys a U

question 341

Multiple Choice

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

• A) total reserves will increase.
• B) total reserves will decrease.
• C) total reserves do not change but the money supply increases.
• D) total reserves do not change but the money supply decreases.

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Definitions:

Conditioned Stimulus

A previously neutral stimulus that, after becoming associated with the unconditioned stimulus, eventually comes to trigger a conditioned response.

Conditioned Response

A learned response to a previously neutral stimulus after it has been repeatedly associated with an unconditioned stimulus.

Classical Conditioning

A training technique in which two stimuli are paired repeatedly; the response initially caused by the second stimulus becomes triggered by the first stimulus after some time.

Conditioned Response

A learned response to a previously neutral stimulus after it has been repeatedly paired with an unconditioned stimulus.