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If the Fed Conducts an Expansionary Open Market Operation to Stimulate

Question 27

Multiple Choice

If the Fed conducts an expansionary open market operation to stimulate the economy purchasing $200 billion of securities, which of the following statements is false:


A) Non-bank public assets will change with - $200 bil. Securities and
+ $200 bil. Deposits held with banks
B) Non-bank public assets will change with + $200 bil. Securities and
- $200 bil. Deposits held with banks
C) The purchase of securities from the non-bank public will increase bank deposits as liabilities allowing banks to use these to make more loans.
D) The Central Bank's Assets will include a rise in Securities by $200 bil. and its liabilities will have a $200 bil. rise in reserves

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