An Open Market Purchase of Securities by the Fed Leads

question 28

Multiple Choice

An open market purchase of securities by the Fed leads to all of the following EXCEPT

• A)an initial increase in excess reserves.
• B)an increase in bank lending.
• C)a decrease in the quantity of money.
• D)an increase in banks' reserves.
• E)an increase in the monetary base.

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Definitions:

Adequate Consideration

The fair and reasonable value exchanged in a contract that is sufficient to make the agreement binding and enforceable.

Requirement

is a necessary or obligatory condition that must be met or complied with, often specified for purposes like quality, safety, or performance.

Consideration

A fundamental concept in contract law, referring to something of value that is exchanged between parties as part of an agreement.

Gratuitous Promise

A promise for which no consideration is given and which is not legally binding.