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Sells bonds as part of open market operations

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Question

If the Reserve Bank of Australia sells bonds as part of open market operations, this ________.

a. increases reserves, encourages banks to make more loans and decreases interest rates.

b. increases reserves, causes banks to reduce their loans and decreases interest rates.

c. decreases reserves, encourages banks to make more loans and increases interest rates.

d. decreases reserves, causes banks to reduce their loans and increases interest rates.

Reference no: EM133277600

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