Within the market for reserves, an increase in the quantity of reserves results in a

Question

Quizplus · Accepted Answer

An increase in the quantity of reserves shifts the supply curve of reserves to the right, causing the equilibrium federal funds rate to decrease. Therefore, choice B is the correct answer. Choices A, C, and D are incorrect because an increase in the quantity of reserves would not have a direct impact on the equilibrium real wage rate or money wage rate, and the first choice is opposite to the actual effect.

Within the Market for Reserves, an Increase in the Quantity