An open market purchase of securities by the Fed leads to all of the following EXCEPT A)an increase in the monetary base. B)an initial increase in excess reserves. C)an increase in banks' reserves. D)a decrease in the quantity of money. E)an increase in bank lending.

Question

Quizplus · Accepted Answer

An open market purchase by the Fed increases the monetary base, excess reserves, and banks' reserves, leading to more bank lending and an increase in the quantity of money, not a decrease.

An Open Market Purchase of Securities by the Fed Leads