When the Fed buys government securities, it: a. lowers the cost ...

[jilianpiloj]

When the Fed buys government securities, it:
 a. lowers the cost of borrowing from the Fed, encouraging banks to make loans to the general public.
  b. raises the cost of borrowing from the Fed, discouraging banks from making loans to the general public.
  c. increases the amount of excess reserves that banks hold, encouraging them to make loans to the general public.
  d. increases the amount of excess reserves that banks hold, discouraging them from making loans to the general public.
  e. decreases the amount of excess reserves that banks hold, discouraging them from making loans to the general public.

Question 2

When the Fed wishes to reduce the economy's money supply, it:
 a. lowers the discount rate.
  b. lowers the required reserve ratio.
  c. reduces the margin requirement.
  d. sells some of its government securities.
  e. prints more money.

[aprice35067]

Answer to Question 1

c

Answer to Question 2

d

[jilianpiloj]

Correct answers!

[aprice35067]

Great! Please up vote