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-The Figure Above Shows the Market for Bank Reserves in Futureland

Question 81

Multiple Choice

  -The figure above shows the market for bank reserves in Futureland. If the Bank of Futureland undertakes an open market purchase of government securities that changes the quantity of reserves by $100 billion, then the cash rate will _ . A) rise, fall, or remain the same, depending on what happens to the demand for reserves. B) fall to 4 per cent a year C) rise to 8 per cent a year D) remain at 6 per cent a year
-The figure above shows the market for bank reserves in Futureland. If the Bank of Futureland undertakes an open market purchase of government securities that changes the quantity of reserves by $100 billion, then the cash rate will _ .


A) rise, fall, or remain the same, depending on what happens to the demand for reserves.
B) fall to 4 per cent a year
C) rise to 8 per cent a year
D) remain at 6 per cent a year

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