If the Fed increases the quantity of reserves, a new equilibrium is reached by a
A) leftward shift of the demand for reserves curve.
B) movement down the demand for reserves curve.
C) rightward shift of the demand for reserves curve.
D) movement up the demand for reserves curve.

Question

Quizplus · Accepted Answer

When the Fed increases the quantity of reserves, the supply of reserves increases, leading to a movement down along the demand for reserves curve as the interest rate falls to reach a new equilibrium.

If the Fed Increases the Quantity of Reserves, a New