(1) Suppose banks decide to hold more excess reserves relative to deposits. Other things the same, this...
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(1) Suppose banks decide to hold more excess reserves relative to deposits. Other things the same, this action will cause the:
(a) Money supply to fall. To reduce the impact of this, The Central Bank could sell bonds
(b) Money supplh to fall. To reduce the impact of this, The Central Bank could buy bonds
(c) Money supply to rise. To reduce the impact of this, The Central Bank could sell bonds
(d) Money supply to rise. To reduce the impact of this, The Central Bank could buy bonds
(2) If the central bank purchases or sells bonds what happens to the supply curve and price level?
Related Book For
Macroeconomics
ISBN: 978-0321675606
6th Canadian Edition
Authors: Andrew B. Abel, Ben S. Bernanke, Dean Croushore, Ronald D. Kneebone
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