If there is no discount lending and the Fed uses open market operations to lower the equilibrium federal funds rate, the _____ of reserves shifts to the
A) demand, right.
B) demand, left.
C) supply, right.
D) supply, left.

Question

Quizplus · Accepted Answer

When the Fed uses open market operations to lower the equilibrium federal funds rate, it buys securities, which increases the reserves in the banking system. This action shifts the supply of reserves to the right.

If There Is No Discount Lending and the Fed Uses