15. In an open-market purchase the Federal Reserve ____ government bonds and the supply of bank reserves _____

Question

15. In an open-market purchase the Federal Reserve ____ government bonds and the supply of bank reserves ______.

A. buys; increases

B. buys; decreases

C. buys; does not change

D. sells; increases

E. sells; decreases

16. A banking panic is an episode in which:

A. depositors, spurred by news or rumors of possible bankruptcy of one bank, rush to withdraw deposits from the banking system.

B. commercial banks, fearing Federal Reserve sanctions, unwillingly participate in open-market operations.

C. commercial banks, concerned about high interest rates, rush to borrow at the Federal Reserve discount rate.

D. depositors, afraid of increasing interest rates, attempt to engage in discount-window borrowing at the Federal Reserve.

E. the Federal Reserve, concerned about unusually rapid increases in the money supply, refuses to make loans to commercial banks through discount window lending.

Answer 1

A. buys; increases

A. depositors, spurred by news or rumors of possible bankruptcy of one bank, rush to withdraw deposits from the banking system.

Answer 2

15. In an open-market purchase the Federal Reserve ____ government bonds and the supply of bank reserves ______.

correct answer is:

A. buys; increases

16. A banking panic is an episode in which:

correct answer is:

A. depositors, spurred by news or rumors of possible bankruptcy of one bank, rush to withdraw deposits from the banking system.