When bad storms slow the check-clearing process,float tends to ________ causing the Fed to initiate defensive open market ________.
A)decrease;sales
B)decrease;purchases
C)increase;sales
D)increase;purchases

Question

Quizplus · Accepted Answer

When bad storms slow the check-clearing process, float (the amount of money in the process of being transferred from one account to another) tends to increase because checks are not being processed as quickly. To counteract the increase in the money supply that this causes, the Fed may initiate defensive open market sales to remove excess reserves and maintain its target for the federal funds rate.

When Bad Storms Slow the Check-Clearing Process,float Tends to ________