If the Fed begins to buy treasury bills to counter a recession, we would expect to see

A. an increase in the demand for money.

B. a decrease in the demand for money

C. an increase in the quantity of money demanded.

D. a decrease in the quantity demanded of money,

E. no change in the demand for money.

Question

Advanced Placement (AP)

Raegan Flores

28 July, 05:08

If the Fed begins to buy treasury bills to counter a recession, we would expect to see

A. an increase in the demand for money.

B. a decrease in the demand for money

C. an increase in the quantity of money demanded.

D. a decrease in the quantity demanded of money,

E. no change in the demand for money.

+3

Answers (1)

Know the Answer?

Angeline Cervantes · Answer 1

Answer: A

Explanation:There will be no change in the demand for money. Instead, this will lead to a money supply increase, because of a chain effect that leads to excess reserve increases, which then lead to interest rates falling and an increase in the money supply.

If the Fed begins to buy treasury bills to counter a recession, we would expect to seeA. an increase in the demand for money.B. a decrease in the demand for moneyC. an increase in the quantity of money demanded.D. a decrease in the quantity demanded of money,E. no change in the demand for money.