When the Reserve Bank purchases government securities,
A) required reserves in the banking system increase, leading to more loans being made.
B) the monetary base does not change.
C) required reserves in the banking system decrease, leading to fewer loans being made.
D) excess reserves in the banking system increase, leading to more loans being made.
E) excess reserves in the banking system decrease, leading to fewer loans being made.
Correct Answer:
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A)
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