Which of the following changes will cause a downward movement along the demand curve for reserves?
A) A decrease in deposits held by banks B) A decrease in the federal funds rate
C) An increase in deposits held by banks D) An increase in the federal funds rate
B
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Which of the following policy actions by the Federal Reserve is likely to increase the money supply?
A. Sell government bonds, decrease reserve requirements, decrease the discount rate. B. Sell government bonds, increase reserve requirements, increase the discount rate. C. Buy government bonds, increase reserve requirements, decrease the discount rate. D. Buy government bonds, decrease reserve requirements, decrease the discount rate.
Using Figure 1 above, if the aggregate demand curve shifts from AD3 to AD2 the result in the long run would be:
A. P1 and Y2. B. P2 and Y1. C. P3 and Y1. D. P3 and Y2.