If the central bank injects liquidity through open market purchases but banks choose to hold all additional reserves as excess reserves, the money…
CA Foundation · Business Economics · MTP · January 2026
If the central bank injects liquidity through open market purchases but banks choose to hold all additional reserves as excess reserves, the money supply will:
Suggested Answer and Working Notes:
Correct Answer: Option (B)
B. Increase only by the initial injection
Topics: Money Market