An open market purchase of government securities by the Federal Reserve shifts the___________ reserves curve___________ .

Question

Quizplus · Accepted Answer

An open market purchase of government securities by the Federal Reserve increases the supply of reserves in the banking system, which shifts the supply of reserves curve rightward. This results in a lower federal funds rate, as banks have extra reserves to lend out to each other, leading to increased lending and economic activity.

An Open Market Purchase of Government Securities by the Federal