Multiple Choice
Suppose the actual overnight interest rate is 4%.If the Bank of Canada lowers its target for the overnight rate to 3.75%,the money supply will eventually
A) increase as a result of open-market operations.
B) increase as a result of an increase in excess reserves in the banking system.
C) decrease as a result of an increase in excess reserves in the banking system.
D) decrease as a result of open-market operations.
E) decrease as a result of a decrease in the demand for new loans.
Correct Answer:
Verified
Correct Answer:
Verified
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