Answer: Option (B) is correct.
Explanation:
Given that,
Reserve ratio = 25%
Fed reserve bank sells (securities) to public = $120 million
When a central bank sells the government securities to the public then as a result money supply in an economy decreases. This is an instrument of monetary policy known as " Open market Operations".
The supply of money is directly decreases by $120 million.
and
Money creating potential of banks = Amount of securities × 
= 120 × 
= 120 × 3
= $360 million
Hence, a decrease in money supply could eventually reach a maximum of $360 million.
If the Federal Reserve did not regulate monetary policy, monitor banks, and provide services for banks, then the transactions would be more costly and interest rates will be more.
The Federal Reserve (Fed) in the US manages the economic and financial system in US. It regulate the monetary policy, monitor banks and provide services for banks. They monitor banks so that there will be no more increases in the costs of transactions than the cost agreed by the Fed. Also it will also reduce the possibility of increase in interest rates as the monetary policy is also implemented by the Fed. As a head of the banks, the Federal Reserve also provide services to other banks. In short, the Fed keeps the US economy stable. If they did not regulate monetary policy, monitor banks, and provide services for banks, then it would have been hard to keep this economic stability in US.
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No, there is not any requirement of recording when the fair value of bonds decreases to $6000000 on December 31 of the current year.
Given that Starbucks purchased bonds with $ 7 million face value at par for cash on July 1 of the current year and the bonds pay 7 percent interest the following June 30 and December 31 and mature in three years.
We are required to tell whether there is requirement of any recording when the fair value of bonds decreases to $6000000 on December 31 of the current year.
A bond is basically a debt security, similar to an IOU and borrowers issue bonds to raise money from investors willing to lend them money for a certain amount of time. When we buy a bond, we are lending to the issuer, which may be a government, municipality, or corporation.
There is not any requirement of any recording when the fair value decreases to $600000 because it is not affecting our books of accounts because in our books they are recorded at face values.
Hence there is not any requirement of recording when the fair value of bonds decreases to $6000000 on December 31 of the current year.
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Answer: The efficient outcome is to have the security system installed. After the meeting the security system will <em><u>be installed</u></em>, which illustrates the <em><u>free rider problem.</u></em>
Free rider is the burden on resource which is been shared, the problem is created by its usage or over-exploitation by individual who aren't paying their fair share.
∴ Here Tom is a free rider. i.e. He is willing to pay $100 where he should've paid $250.
