If the account manager finds that the current level of bank reserves is greater than the desired level indicated in the most recent directive from the FOMC, he will
A)order banks to reduce their reserves.
B)order banks to raise their interest rates in an attempt to get them to loan out more of their reserves.
C)conduct an open market purchase.
D)conduct an open market sale.

Question

Quizplus · Accepted Answer

If the account manager finds that the current level of bank reserves is greater than the desired level indicated in the most recent directive from the FOMC, conducting an open market sale would be the most suitable option. This would involve selling government securities in the open market, which would decrease the bank reserves and increase interest rates, encouraging banks to loan out more of their reserves.

If the Account Manager Finds That the Current Level of Bank