QUESTION 37 When the Fed banks in an open market operation t

QUESTION 37 When the Fed banks in an open market operation, the total amount of assets of the banking system a. sells securities to, decreases b. sells securities to; increases O c. buys securities from; does not change o d. buys securities from, decreases O e. buys securities from; increases QUESTION 38 When banks have excess reserves they can o a only buy bonds. O b only make loans c. make loans or buy bonds O d accept more deposits in order to use up their excess reserves. e, buy deposits.

Solution

1) Solution: buys securities from; does not change

Explanation: The assets of the bank are the same, but their composition has changed

2) Solution: can make loans or buy bonds

Explanation: Excess reserves give banks more ability to make loans or buy bonds.