Fed open market purchases of government securities will

A) lower banks' excess reserves.
B) cause an immediate recession.
C) increase banks' excess reserves.
D) cause the unemployment rate to rise.
E) cause the market rate of interest on government securities to rise.

Open Market Purchases

Transactions where a central bank buys government securities from the market to increase the money supply and stimulate economic activity.

Excess Reserves

The capital reserves held by a bank or financial institution in excess of what is required by regulators, central banks, or other governing bodies.

Recession

An interval of short-term economic slump, where commercial activities and industrial operations decline, often determined by a fall in GDP for two back-to-back quarters.