-Based on the Above Table, an Open Market Operation in Which

question 441

Multiple Choice

-Based on the above table, an open market operation in which the Fed purchased $100,000 of government securities would

• A)create a reserve deficiency for the banking system.
• B)lead to a maximum potential expansion of the money supply of $100,000.
• C)lead to a maximum potential expansion of the money supply of $1 million.
• D)cause demand deposits to fall by $100,000.