If the Fed buys government bonds from the open market,it will cause ________.
A) the supply curve for reserves to shift to the left
B) the supply curve for reserves to shift to the right
C) an upward movement along the supply curve for reserves
D) a downward movement along the supply curve for reserves

Question

Quizplus · Accepted Answer

When the Fed buys government bonds from the open market, it injects reserves into the banking system. This increase in reserves will cause the supply curve for reserves to shift to the right, as there is now more supply of reserves available in the market.

If the Fed Buys Government Bonds from the Open Market,it