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Suppose, at a given interbank rate, there is an excess demand for reserves in the interbank market for reserves. If the central bank wants the
Suppose, at a given interbank rate, there is an excess demand for reserves in the interbank market for reserves. If the central bank wants the interbank rate to stay at that level, then it should undertake an open market ________ of bonds, everything else held constant. If the central bank does nothing, however, the interbank rate will ________.
A. | sale; increase | |
B. | sale; decrease | |
C. | purchase; stay the same | |
D. | purchase; increase | |
E. | purchase; decrease |
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