When the Fed Sells Government Securities in the Open Market,the

question 20

Multiple Choice

When the Fed sells government securities in the open market,the money supply ________ because ________.

• A)decreases;banks lose liquidity,they make fewer loans and checking account deposits decrease
• B)increases;banks gain liquidity,they make more loans and checking account deposits increase
• C)increases;banks lose liquidity,they make more loans and checking account deposits increase
• D)decreases;banks gain liquidity,they make fewer loans and checking account deposits decrease
• E)none of the above