Economics · Monetary Policy Instruments
Reverse repo operations conducted by a central bank primarily lead to which of the following immediate effects in the banking system?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1An immediate net decrease in the statutory bank reserves
- 2Temporary absorption/withdrawal of excess liquidity from the banking system✓
- 3Permanent structural absorption of core liquidity
- 4Rapid expansion of the systemic money supply
Correct answer
Temporary absorption/withdrawal of excess liquidity from the banking system
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