Question 1
When the Fed raises the required reserve ratio, the banks' excess reserves will initially ________ and the money supply ________.
◦ remain constant; decreases
◦ decrease; decreases
◦ increase; remain constant
◦ increase; increases
Question 2
An open-market purchase of securities by the Fed results in ________ in reserves and ________ in the supply of money.
◦ an increase; a decrease
◦ a decrease; a decrease
◦ an increase; an increase
◦ a decrease; an increase