If the Fed sells government bonds in the open market,it will cause ________.
A) the supply curve for reserves to shift to the left
B) the supply curve for reserves to shift to the right
C) an upward movement along the supply curve for reserves
D) a downward movement along the supply curve for reserves

Question

Quizplus · Accepted Answer

Selling government bonds reduces the amount of reserves held by banks, causing a decrease in the supply of reserves. This shifts the supply curve for reserves to the left.

If the Fed Sells Government Bonds in the Open Market,it