When the Federal Reserve extends a discount loan to a bank, the monetary base ________ and reserves ________.
A) remains unchanged; decrease
B) remains unchanged; increase
C) increases; increase
D) increases; remain unchanged
Answer: C
When the Federal Reserve extends a discount loan to a bank, the monetary base ________ and reserves ________.
A) remains unchanged; decrease
B) remains unchanged; increase
C) increases; increase
D) increases; remain unchanged
Answer: C