If the Treasury borrows from the Federal Reserve, the lending capacity of banks is reduced.

Name: If the Treasury borrows from the Federal Reserve, the lending capacity of banks is reduced.
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Question

​If the Treasury borrows from the Federal Reserve, the lending capacity of banks is reduced.

Quizplus · Accepted Answer

When the Treasury borrows from the Federal Reserve, it does not directly affect the lending capacity of banks. This process involves the Federal Reserve buying Treasury securities, which increases reserves in the banking system, potentially enhancing banks' ability to lend.

​If the Treasury Borrows from the Federal Reserve, the Lending

If the Treasury Borrows from the Federal Reserve, the Lending