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An Open Market Purchase of Securities by the Central Bank

Question 3

Multiple Choice

An open market purchase of securities by the central bank from banks will:


A) Increase the banks' revenue even if the bank does nothing with the reserves
B) Induce the banks to make more loans since their revenue will decrease if they do nothing
C) Decrease the amount of deposits in the banking system
D) Decrease the banks' willingness and ability to make loans

Correct Answer:

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