Multiple Choice
Suppose banks decide to hold more excess reserves relative to deposits. Other things the same, this action will cause the money supply to
A) fall.To reduce the impact of this the Fed could sell Treasury bonds.
B) fall.To reduce the impact of this the Fed could buy Treasury bonds.
C) rise.To reduce the impact of this the Fed could sell Treasury bonds.
D) rise.To reduce the impact of this the Fed could buy Treasury bonds.
Correct Answer:
Verified
Correct Answer:
Verified
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