When the Fed Buys Bonds Through Open Market Operations, It

question 27

Multiple Choice

When the Fed buys bonds through open market operations, it gives banks money in return, which:

• A) increases their ability to lend, and increases aggregate demand.
• B) decreases their ability to lend, and increases aggregate demand.
• C) increases their ability to lend, and decreases aggregate demand.
• D) decreases their ability to lend, and decreases aggregate demand.

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