The supply curve for reserves shifts to the left and the federal funds rate rises when the Fed
A) raises reserves requirements.
B) does an open market purchase.
C) does an open market sale.
D) raises the discount rate.

Question

Quizplus · Accepted Answer

An open market sale by the Fed reduces the supply of reserves in the banking system, shifting the supply curve for reserves to the left and causing the federal funds rate to rise.

The Supply Curve for Reserves Shifts to the Left and the Federal