An open market purchase of securities by the Fed leads to all of the following EXCEPT
A)an initial increase in excess reserves.
B)an increase in bank lending.
C)a decrease in the quantity of money.
D)an increase in banks' reserves.
E)an increase in the monetary base.

Question

Quizplus · Accepted Answer

An open market purchase of securities by the Fed leads to an initial increase in excess reserves, an increase in bank lending, an increase in banks' reserves, and an increase in the monetary base. It does not lead to a decrease in the quantity of money.

An Open Market Purchase of Securities by the Fed Leads