If the Fed sells bonds through its open market operations, then there is

Question

Quizplus · Accepted Answer

When the Fed sells bonds through its open market operations, it increases the supply of bonds in the market, which leads to a fall in the price of existing bonds. This happens because the demand for bonds remains constant, while the supply of bonds has increased, resulting in a surplus of bonds in the market. In order to sell the surplus bonds, bond traders have to lower the price of existing bonds, which in turn, leads to an increase in bond yields (i.e. interest rates).

If the Fed Sells Bonds Through Its Open Market Operations