Multiple Choice
When the Federal Reserve sells government bonds to the public, it directly
A) increases the M1 money supply and increases the reserves of the commercial banking system.
B) increases the M1 money supply, while reducing the reserves of the commercial banking system.
C) reduces the M1 money supply, while increasing the reserves of the commercial banking system.
D) reduces the M1 money supply and decreases the reserves of the commercial banking system.
Correct Answer:
Verified
Correct Answer:
Verified
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