If the Fed increases the quantity of reserves, the federal funds rate __________and the quantity of money __________.

Question

Quizplus · Accepted Answer

When the Fed increases the quantity of reserves, it typically leads to a decrease in the federal funds rate due to the increased supply of reserves. This, in turn, can lead to an increase in the quantity of money as banks have more reserves to lend out, expanding the money supply.

If the Fed Increases the Quantity of Reserves, the Federal