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The Quantity of Reserves Supplied Increases as Interest Rates Rise

Question 33

Multiple Choice

The quantity of reserves supplied increases as interest rates rise because


A) the Treasury borrows more at higher interest rates.
B) consumers don't want to borrow as much so more money is left in banks.
C) as interest rates rise, banks fear losses so they decrease lending.
D) banks find it more profitable to loan out excess reserves to other banks.

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