Assuming that the Federal Reserve Banks sell $40 million in government securities to commercial banks and the reserve requirement is 20%, then the effect will be to reduce ________.
A. the money supply by potentially $200 million
B. excess reserves by $8 million
C. excess reserves by $200 million
D. the money supply by potentially $400 million
Answer: A
You might also like to view...
You observe that the price of a good rises and the quantity decreases. These observations can be the result of the
A) demand curve shifting rightward. B) demand curve shifting leftward. C) supply curve shifting rightward. D) supply curve shifting leftward.
A country's balance of payments shows a
A) detailed record of the import and export of services for the country. B) detailed record of the country's imports. C) summary record of international financial assistance received by the country. D) summary record of a country's economic transactions with foreign residents and governments over a year.