Reference no: EM132232370

1. An open market operation increases the money supply when the Federal Reserve

a. sells bonds to banks, which increases bank reserves.

b. buys bonds from banks, which increases bank reserves.

c. buys bonds from banks, which decreases bank reserves.

2. The proportion of deposits that banks are legally required to deposit with the central bank are called

a. discount requirements.

b. reserve requirements.

c. deposit requirements.

3. The Federal Reserve's monetary policies include changes in

a. tax rates.

b. reserve requirements.

c. government spending.