If the Fed Wants to Increase the Lending Capacity of the System

question 118

Multiple Choice

If the Fed wants to increase the lending capacity of the system by $60 billion and the reserve requirement is 10 percent,it should

• A)Buy $60 billion in bonds from banks.
• B)Buy $6 billion in bonds from banks.
• C)Sell $60 billion in bonds to the public.
• D)Sell $6 billion in bonds to the public.