If the Fed increases the quantity of reserves, a new equilibrium is reached by a
A) rightward shift of the demand for reserves curve.
B) movement down the demand for reserves curve.
C) leftward shift of the demand for reserves curve.
D) movement up the demand for reserves curve.
E) None of the above answers is correct.

Question

Quizplus · Accepted Answer

When the Fed increases the quantity of reserves, the supply of reserves increases, leading to a movement down along the demand for reserves curve to a new equilibrium with a lower interest rate.

If the Fed Increases the Quantity of Reserves, a New