Open market sales ________ reserves and the monetary base thereby ________ the money supply.
A)raise;lowering
B)raise;raising
C)lower;lowering
D)lower;raising

Question

Quizplus · Accepted Answer

Open market sales decrease reserves held by banks and therefore decrease the monetary base. This decrease in the monetary base leads to a decrease in the money supply as well. Therefore, open market sales lower both the monetary base and the money supply.

Open Market Sales ________ Reserves and the Monetary Base Thereby