An open market sale leads to an expansion of reserves and deposits in the banking system and hence to a decline in the monetary base and the money supply.

Name: An open market sale leads to an expansion of reserves and deposits in the banking system and hence to a decline in the monetary base and the money supply.
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Question

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An open market sale by the central bank leads to a contraction of reserves and deposits in the banking system, which in turn reduces the monetary base and the money supply.

An Open Market Sale Leads to an Expansion of Reserves