When the Fed ________,the quantity of banks' reserves decreases.
A)hikes taxes
B)buys government securities
C)sells government securities
D)lowers the required reserve ratio
E)raises the required reserve ratio

Question

Quizplus · Accepted Answer

When the Fed sells government securities, banks purchase them and pay for them by reducing their reserves at the Fed. This decreases the quantity of banks' reserves.

When the Fed ________,The Quantity of Banks' Reserves Decreases