If the Bank of Futureland lowers the target federal funds rate by 1 percentage point, the central bank will conduct an open market ________ of government securities of ________ to ________ the supply of reserves.
A) purchase; $25 billion; decrease
B) sale; $25 billion; increase
C) sale; $75 billion; decrease
D) purchase; $75 billion; increase
E) purchase; $25 billion; increase
ANSWER:
E