When the Fed buys government securities, the immediate effect of ...

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When the Fed buys government securities, the immediate effect of the purchase is that banks'
 
  A) reserves decrease.
  B) loans decrease.
  C) reserves increase.
  D) assets increase.
  E) deposits increase.

Question 2

In the long run, the price level adjusts
 
  A) to achieve money market equilibrium.
  B) so that the inflation rate equals the growth rate of real GDP.
  C) so that the inflation rate equals zero.
  D) so that the inflation rate is moderate.
  E) so that the real interest rate equals the nominal interest rate.

[izzat]

Answer to Question 1

C

Answer to Question 2

A

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