-The figure above shows the market for bank reserves in Futureland.If the Bank of Futureland lowers the target federal funds rate by 1 percentage point, the central bank will conduct an open market ________ of government securities of ________ to ________ the supply of reserves.

Question

Quizplus · Accepted Answer

The Bank of Futureland is lowering the target federal funds rate, which means it wants to increase the supply of reserves. To do this, it will purchase government securities, which will increase the reserves held by banks. The amount of government securities purchased will be $25 billion, which will increase the supply of reserves by $25 billion.

-The Figure Above Shows the Market for Bank Reserves in Futureland.If