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Question
when the central bank decides it will sell bonds using open market operations:
interest rates decrease.
the money supply increases.
the money supply decreases.
question 12
1 pts
when banks hold excess reserves because they dont see good lending opportunities:
it negatively affects contractionary monetary policy.
it negatively affects expansionary monetary policy.
expansionary monetary policy is unaffected.
contractionary monetary policy is unaffected
For the first question: When a central bank sells bonds via open market operations, it takes money from commercial banks and the public in exchange for bonds, reducing the overall amount of money in circulation.
For Question 12: Expansionary monetary policy relies on banks lending out reserves to increase the money supply. If banks hold excess reserves instead of lending, this policy's ability to stimulate the money supply is weakened.
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First question: the money supply decreases.
Question 12: it negatively affects expansionary monetary policy.