Economics Question

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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When the central bank purchases government securities on the open market, it increases the reserves of business banks and allows them to extend their loans and investments; increases the worth of presidency securities and effectively reduces their interest rates; and reduces overall interest rates, promoting business investments. This will happen as the money supply will shift to the right and the interest rate will decrease.

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