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Which of the Following Effects Occur When the Treasury Borrows

Question 90

Multiple Choice

Which of the following effects occur when the Treasury borrows from depository institutions?


A) The money supply increases
B) Legal reserves and excess reserves remain unchanged
C) Total spending remains unchanged since depositories, not the public, are lending to the Treasury
D) If unemployment is low, prices will fall
E) The increased quantity of government securities will depress interest rates in the short run

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