If the Federal Reserve simultaneously sells government bonds in the open market and raises reserve requirements,the

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When the Federal Reserve sells government bonds in the open market, it decreases the amount of reserves that banks hold. Additionally, raising reserve requirements means that banks must hold a higher percentage of deposits as reserves. Both of these actions reduce the amount of reserves available to banks, which in turn reduces the amount of money that banks can lend out. Therefore, the money supply will decrease.

If the Federal Reserve Simultaneously Sells Government Bonds in the Open