An open-market sale of securities by the Fed results in ________ in reserves and ________ in the supply of money.

Question

Quizplus · Accepted Answer

When the Federal Reserve sells securities in the open market, it effectively takes money out of circulation and holds it in exchange for the securities. This action reduces the reserves that banks have available to lend, leading to a decrease in the overall supply of money in the economy.

An Open-Market Sale of Securities by the Fed Results in ________