When the Federal Reserve makes an open market purchase,the reserves of the banking system will:
A) increase.
B) decrease.
C) remain constant.
D) become difficult to predict.

Question

Quizplus · Accepted Answer

When the Federal Reserve makes an open market purchase, it injects money into the economy, which increases the reserves of the banking system. As a result, the answer is A, the reserves of the banking system will increase.

When the Federal Reserve Makes an Open Market Purchase,the Reserves