When the Fed buys government securities in the open market, it ________.
A. decreases the excess reserves of the banking system, reducing excess reserves for overnight loans in the federal funds market and thus lowering the federal funds rate
B. increases the excess reserves of the banking system, raising excess reserves for overnight loans in the federal funds market and thus lowering the federal funds rate
C. increases the excess reserves of the banking system, reducing excess reserves for overnight loans in the federal funds market and thus lowering the federal funds rate
D. decreases the excess reserves of the banking system, reducing excess reserves for overnight loans in the federal funds market and thus increasing the federal funds rate
Answer: B
You might also like to view...
The above (incomplete) table provides information about the relationships between labor and various product measures. The total product that can be produced with 6 units of labor is
A) 20. B) 19. C) More information is needed to answer the question. D) None of the above answers is correct.
Assume the United States is the "domestic" country and Switzerland is the "foreign" country. Which of the following might decrease the real exchange rate between the United States and Switzerland?
A) a depreciation of the franc B) an appreciation of the dollar C) a decrease in the price level in Switzerland D) a decrease in the price level in the United States