Table 14.1Monetary Aggregates of the U.S. Financial SystemItemAmountCash held by public$250 billionTransactions deposits$1,000 billionRequired reserves$150 billionExcess reserves$0 billionU.S. bonds held by public$1,000 billionAssume an original balance sheet: Refer to Table 14.1. If the Fed buys $10 billion in bonds from the public, all of the following are true except
A. The discount rate will rise.
B. Additional increases in M1 will occur after the multiplier process.
C. The public will still hold $990 billion worth of bonds.
D. M1 will increase initially by $10 billion.
Answer: A
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Indicate whether the statement is true or false