Other things equal. an open market purchase of government securities by the Fed will not result in which of the following?

Question

Quizplus · Accepted Answer

An open market purchase of government securities by the Fed injects additional reserves into the banking system, which typically leads to an increase, not a reduction, in the volume of loans issued by the commercial banking system. This is because banks have more funds to lend out, which can lead to increased lending activity.

Other Things Equal