The monetary expansion process from an open market operation continues until
A) required reserves are eliminated.
B) the Federal Reserve takes actions to stop the process.
C) the discount rate is lower than market interest rates.
D) excess bank reserves are eliminated.

Question

Quizplus · Accepted Answer

The monetary expansion process continues until excess bank reserves are eliminated because banks will continue to lend out their excess reserves, which increases the money supply, until there are no more excess reserves left.

The Monetary Expansion Process from an Open Market Operation Continues