When the Fed sells government securities, banks' reserves _{--------------------}, the quantity of money_{--------------------}, and the federal funds rate_{--------------------} .

Question

Quizplus · Accepted Answer

When the Fed sells government securities, banks' reserves decrease because they pay for these securities, reducing their available funds. This leads to a decrease in the quantity of money in the economy and causes the federal funds rate to rise due to the reduced supply of reserves.

When the Fed Sells Government Securities, Banks' Reserves --------------------, the Quantity

When the Fed Sells Government Securities, Banks' Reserves _{--------------------}, the Quantity