An Open Market Purchase of Government Securities by the Fed

question 248

Multiple Choice

An open market purchase of government securities by the Fed will cause which of the following?

• A) an excess quantity of reserves supplied and an increase in the federal funds rate
• B) an excess quantity of reserves supplied and a reduction in the federal funds rate
• C) an excess quantity of reserves demanded and an increase in the federal funds rate
• D) an excess quantity of reserves demanded and a reduction in the federal funds rate

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