The Federal Reserve increases the money supply by ___________?
Correct answer: B. buying treasury bills
- A. selling treasury bills
- B. buying treasury bills
- C. selling Swiss bills
- D. buying Swiss bills
Explanation
When the Federal Reserve buys Treasury bills, it pays sellers by creating bank reserves, which increases the money supply. Selling Treasury bills withdraws reserves and has the opposite effect.
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Business finance explains how organisations plan, obtain and use money while balancing risk, return and liquidity. Topics include financial statements, time value of money, budgeting, working capital, capital structure, sources of finance, investment appraisal and cost of capital. Capital budgeting evaluates long-term projects, whereas working capital manages day-to-day operations.
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