The Fed buys securities and gives a bond dealer a check for the amount. After the check has cleared
A) reserves remain unchanged because the increase of reserves at the dealer's bank are offset by an increase in reserves at the Fed.
B) reserves have risen by the amount of the check because the Fed clears the check by increasing the amount of the bank's deposits with the Fed.
C) reserves have fallen by the amount of the check because the Fed clears the check by reducing the bank's deposits at the Fed.
D) reserves have fallen by the amount of the reserves times the reserve ratio and the money supply increases by the difference between the amount of the check and the increase in the reserves.
B
You might also like to view...
Which of the following activities will not be included in the GDP of an economy?
a. Sam buying a toy car imported from China from a toy shop in Boston b. Jane paying a certain amount to Moe to mow her lawn c. Bob buying a pound of cherries to garnish the cakes made in his bakery shop d. Corey paying his landlord rent for his new apartment
Studies indicate that the price elasticity of demand for beer is about 0.9 . A government policy aimed at reducing beer consumption changed the price of a case of beer from $10 to $20 . According to the midpoint method, the government policy should have reduced beer consumption by
a. 30%. b. 40%. c. 60%. d. 74%.