If the demand for reserves is unchanged, an increase in the quantity of reserves will

Question

Quizplus · Accepted Answer

If demand for reserves is unchanged, an increase in the quantity of reserves will lead to a decrease in the federal funds rate. This is because there are more reserves available for banks to lend to each other, making it easier to obtain loans and therefore lowering the interest rate they charge each other (the federal funds rate).

If the Demand for Reserves Is Unchanged, an Increase in the Quantity