If the Fed buys U.S.government securities,

Name: If the Fed buys U.S.government securities,
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Question

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When the Fed buys U.S. government securities, it increases the money supply in the economy. This will cause interest rates, including the federal funds rate, to fall. The discount rate may also fall as a result of this action, but it is not the most direct effect. Bank reserves may increase or decrease depending on whether the securities are purchased from banks or other financial institutions.

If the Fed Buys U.S.government Securities