If the Fed sells U.S.government securities,
A) the federal funds rate rises.
B) the U.S.Treasury gains some revenue.
C) the U.S.Treasury loses some revenue.
D) banks' reserves increase.
E) None of the above answers is correct.

Question

Quizplus · Accepted Answer

When the Fed sells U.S. government securities, it reduces the reserves in the banking system, leading to an increase in the federal funds rate.

If the Fed Sells U.S.government Securities