Suppose the Fed Sells a $50,000 U

question 47

Multiple Choice

Suppose the Fed sells a $50,000 U.S.Treasury security to Martha,a member of the public.If Martha writes a check to the Fed in order to buy this security,the money in her checking account will be transferred to

• A) the Fed,and now the Fed will have $50,000 more in reserves than it had before.
• B) her bank,and now her bank will have $50,000 more in reserves than it had before.
• C) the Fed,and now it is as if the money doesn't exist.
• D) the Treasury,and now the Treasury will have $50,000 more in reserves than it had before.

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Definitions:

Binomial Probability

The probability of achieving a specific number of successes in a fixed number of independent trials, each with the same probability of success.

Binomial Distribution

A probability distribution that summarizes the likelihood that a value will take one of two independent states under a given number of observations.

Normal Distribution

A bell-shaped frequency distribution curve that is symmetrical about the mean, representing the distribution of many types of data.

Sample Proportion

The proportion or percentage of the sample that embodies a specific characteristic or feature.