The Quantity of Reserves Supplied Increases as Interest Rates Rise

question 33

Multiple Choice

The quantity of reserves supplied increases as interest rates rise because

• A)the Treasury borrows more at higher interest rates.
• B)consumers don't want to borrow as much so more money is left in banks.
• C)as interest rates rise, banks fear losses so they decrease lending.
• D)banks find it more profitable to loan out excess reserves to other banks.