When a central bank sells bonds,cash reserves throughout the financial system increase,interest rates fall,and investment spending increases.

Question

Quizplus · Accepted Answer

When a central bank sells bonds, cash reserves throughout the financial system decrease, not increase. As a result, interest rates tend to rise due to a decrease in the supply of money, which can lead to a decrease in investment spending.

When a Central Bank Sells Bonds,cash Reserves Throughout the Financial