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Suppose banks decide to hold more excess reserves relative to deposits. Other things the same, this action will cause the money supply to O a.
Suppose banks decide to hold more excess reserves relative to deposits. Other things the same, this action will cause the money supply to O a. fall. To reduce the impact of this the Fed could sell Treasury bonds. O b. rise. To reduce the impact of this the Fed could buy Treasury bonds. O c. rise. To reduce the impact of this the Fed could sell Treasury bonds. . O d. fall. To reduce the impact of this the Fed could buy Treasury bonds
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