The Effect of an Open Market Purchase on Reserves Differs

question 209

Multiple Choice

The effect of an open market purchase on reserves differs depending on how the seller of the bonds keeps the proceeds.If the proceeds are kept in currency,the open market purchase ________ reserves; if the proceeds are kept as deposits,the open market purchase ________ reserves.

• A) has no effect on; has no effect on
• B) has no effect on; increases
• C) increases; has no effect on
• D) decreases; increases

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