All else equal, if the Federal Reserve sells Treasury securities, then which of the following is NOT true?

Question

Quizplus · Accepted Answer

When the Federal Reserve sells Treasury securities, it effectively removes money from the economy, leading to a decrease in the money supply. This action causes the money supply curve to shift left (A is true) and the money supply in the economy to fall (C is true), which typically results in an increase in interest rates, not a decrease. Therefore, B is not true. The sale of securities and the resulting decrease in money supply also cause a movement along the money demand curve due to the change in interest rates (D is true).

All Else Equal, If the Federal Reserve Sells Treasury Securities