Open market sale of government securities results in:

Question

Quizplus · Accepted Answer

When the government sells securities on the open market, it essentially borrows money from the public. This reduces the amount of money available in the economy, leading to a decrease in bank reserves. Therefore, option B is correct. Option A is incorrect because there is a decrease in bank reserves, not an increase. Option C is not necessarily true as changes in interest rates depend on a variety of factors such as monetary policy, inflation, and economic conditions. Option D is incorrect as there is a clear impact of open market sales on bank reserves.

Open Market Sale of Government Securities Results In