question archive The lending ability of commercial banks increases when the: a
The lending ability of commercial banks increases when the: a
Subject:EconomicsPrice:2.88 Bought3
The lending ability of commercial banks increases when the:
a. reserve requirement is raised.
b. Fed sells securities in the open market.
c. Treasury collects tax revenues.
d. Fed buys securities in the open market.
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- The correct option is d. Fed buys securities in the open market.
There are various tools by which the Fed can increase the lending ability of the commercial banks like reducing the market interest rate, reducing the discount rate, buying of securities, et cetera.
