In 2012 the Fed announced that it would purchase $40 billion of mortgage securities per month. These purchases shifted the ________ reserves curve ________.
A) supply of; leftward
B) supply of; rightward
C) demand for; rightward
D) demand for; leftward

Question

Quizplus · Accepted Answer

The Federal Reserve's purchase of $40 billion of mortgage securities per month increases the reserves available in the banking system, shifting the supply of reserves curve rightward. This is because when the Fed purchases securities, it credits the banks' reserves, thus increasing the supply of money in the banking system.

In 2012 the Fed Announced That It Would Purchase $40