The Finding That Bank Loans Decline and the Volume of Commercial

question 46

Multiple Choice

The finding that bank loans decline and the volume of commercial paper issued increases when the Fed contracts the level of bank reserves appears to indicate that

• A)the impact of contractionary monetary policy comes mainly from its effect on interest rates.
• B)during these episodes borrowers who are able to do so switch toward nonbank sources of financing.
• C)changes in credit demand must be responsible.
• D)during these episodes savers must convert bank deposits into commercial paper purchases.

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