How do open-market sales affect the price level and real GDP?
A) They increase the price level and real GDP.
B) They decrease the price level and real GDP.
C) They increase the price level and decrease real GDP.
D) They decrease the price level and increase real GDP.

Question

Quizplus · Accepted Answer

Open-market sales involve the selling of government securities by the central bank to the public, which decreases the money supply. This leads to higher interest rates, reducing investment and spending, which in turn decreases the price level and real GDP.

How Do Open-Market Sales Affect the Price Level and Real