If the Fed Lends to Member Banks, What Happens to Reserves

question 166

Multiple Choice

If the Fed lends to member banks, what happens to reserves and the money supply?

• A) Reserves increase and the money supply decreases.
• B) Both increase.
• C) Reserves decrease and the money supply increases.
• D) Both decrease.

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Definitions:

Customer Service Department

A division within a company that handles customer inquiries, complaints, and provides support and assistance.

Variable Costs

Money spent that varies depending on the quantity of items made or sold, including the expenses for materials and manpower.

Fixed Costs

Costs that remain constant regardless of the amount of goods produced or sold during a specific timeframe, including rent, wages, and insurance premiums.

Variable Medical Expenses

Costs associated with medical care that vary with the level of services used by a patient.