The monetary expansion process from an open market operation continues until
A) required reserves are eliminated.
B) the discount rate is lower than market interest rates.
C) the Federal Reserve takes actions to stop the process.
D) excess bank reserves are eliminated.

Question

Quizplus · Accepted Answer

The monetary expansion process continues until excess bank reserves are eliminated, as banks will continue to lend out excess reserves, increasing the money supply until there are no more excess reserves.

The Monetary Expansion Process from an Open Market Operation Continues