The sale of government securities by the Fed leads to

Name: The sale of government securities by the Fed leads to
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Question

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When the Federal Reserve sells government securities, it effectively removes money from the banking system, leading to a decrease in bank reserves. This reduction in reserves means banks have less money to lend out, causing a contraction in bank lending. Additionally, the sale of these securities decreases the monetary base, which is the sum of bank reserves and currency in circulation.

The Sale of Government Securities by the Fed Leads to