If total Fed liabilities __________, then reserves have to __________, everything else being equal.
A) fall; rise
B) rise; rise
C) fall; fall
D) None of the above.

Question

Quizplus · Accepted Answer

If total Fed liabilities fall, this means that the Fed owes less money to other entities. In order to reduce liabilities, the Fed would need to reduce the amount of money it has created and put into circulation. This reduction in reserves would cause reserves to fall, everything else being equal.

If Total Fed Liabilities __________, Then Reserves Have to __________

If Total Fed Liabilities , Then Reserves Have to