Open-market operations change the ; changes in reserve requirements change the ; and changes in the discount rate change the .
A)monetary base; monetary base; monetary base
B)money multiplier; money multiplier; money multiplier
C)monetary base; money multiplier; monetary base
D)money multiplier; monetary base; money multiplier

Question

Quizplus · Accepted Answer

Open-market operations involve buying or selling government securities, which directly affects the monetary base. Changes in reserve requirements change the money multiplier, as banks can lend out more or less money based on the amount of reserves they are required to hold. Changes in the discount rate, which is the interest rate at which banks can borrow from the Federal Reserve, also affect the monetary base as it incentivizes banks to borrow more or less from the central bank.

Open-Market Operations Change the ; Changes in Reserve Requirements Change