---### 1.C**Question:**Suppose the Federal Reserve buys Treasury Bills and Treasury Bonds in the open market. Compared to a setting without such open market operations, which of the following answers are CORRECT?**Options:**a) Banks short of reserves end up with the same amount of loans.b) Banks short of reserves end up with less deposits.c) Banks short of reserves end up with less equities.d) The federal funds rate is lower.e) The money supply is lower.---

Here, it is given that the Federal Reserve buys treasure bonds and treasury bills in the open market…

1.C Suppose the Federal Reserve buys Treasury Bills and Treasury Bonds in the open market. Compared to a setting without such open market operations, which of the following answers are CORRECT? a) Banks short of reserves end up with the same amount of loans. b) Banks short of reserves end up with less deposits. c) Banks short of reserves end up with less equities. d) The federal funds rate is lower. e) The money supply is lower.

1.C Suppose the Federal Reserve buys Treasury Bills and Treasury Bonds in the open market. Compared to a setting without such open market operations, which of the following answers are CORRECT? a) Banks short of reserves end up with the same amount of loans. b) Banks short of reserves end up with less deposits. c) Banks short of reserves end up with less equities. d) The federal funds rate is lower. e) The money supply is lower.

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter28: Monetary Policy And Bank Regulation

Section: Chapter Questions

Problem 34CTQ: Explain what would happen if banks were notified they had to increase their required reserves by one...

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