Ceteris paribus, when the Fed increases the supply of reserves, which of the following happens?

Question

Quizplus · Accepted Answer

When the Fed increases the supply of reserves, it injects more money into the economy, which leads to a shift in the supply curve to the right for real money balances. This means there is more money available to be held as reserves or to be spent, which increases the supply of money and reduces the market interest rate.

Ceteris Paribus, When the Fed Increases the Supply of Reserves