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If a Central Bank Wants to Implement a Contractionary Policy

Question 93

Multiple Choice

If a central bank wants to implement a contractionary policy that decreases real GDP, it conducts an open market operation by ________ securities. Bank reserves ________ and the supply of loanable funds ________. The quantity of money ________.


A) selling; decrease; decreases; decreases
B) purchasing; decrease; decreases; decreases
C) purchasing; decrease; increases; decreases
D) selling; increase; increases; increases
E) purchasing; increase; increases; increases

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