Using the data in the above table, an open market operation in which the Fed purchased $100,000 of government securities from a bank would

Question

Quizplus · Accepted Answer

An open market operation in which the Fed purchases government securities from a bank would increase the reserves of the banking system by $100,000. This increase in reserves would allow the bank to make more loans and potentially stimulate economic activity. It would not cause a rise in the federal funds rate or create a reserve deficiency for the banking system. Demand deposits would not be affected by this transaction.

Using the Data in the Above Table, an Open Market