An open market sale of securities will tend to cause

Question

Quizplus · Accepted Answer

An open market sale of securities involves the central bank selling government bonds to banks and other financial institutions in exchange for central bank money. This increases the supply of government bonds and reduces the supply of central bank money, leading to a decrease in the amount of reserves or funds that banks have available to lend. Therefore, option A is the correct choice as it states that there will be a reduction in the supply of central bank money. Option B and C are incorrect as they do not reflect what happens during an open market sale.

An Open Market Sale of Securities Will Tend to Cause