1. Open market purchases by the Fed will __ bank reserves which will __ loans and thus __ the money supply.

a. decrease; decrease; increase.

b. increase; decrease; increase.

c. increase; increase; increase.

d. decrease; decrease; decrease.

People often confuse the functions of the Federal Reserve and the US Treasury. While the Fed is the __ of the US government and creates a stable monetary framework for the economy, the US Treasury is the __ managing the financial affairs of the federal government.

a. bank; accountant

b. accountant; bank

c. manager; banker

d. budgetary agent; monetary agent