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Question
When the Fed buys U.S. government securities on the open market,
A) the reserves of the banking system expand.
B) the reserves of the banking system contract.
C) the money supply contracts.
D) the total reserves of the banking system will fall below required reserves.
Answer
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Related questions
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Which of the following statements is FALSE?
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The United Statesʹ balance of payments is likely to improve whenA) there is an increase in political instability in other countries.B) the inflation rate in the United States rises relative to other countries.C) the American government increases its spending on foreign aid. D) American people want to invest more in foreign countries.