How would the Fed's sale of government bonds on the open market affect the money supply?
What will be an ideal response?
The Fed, by selling bonds, is decreasing the supply of money, because it is taking money out of the hands of people who would otherwise deposit it in a bank, which would in turn loan it out, etc.
Economics
You might also like to view...
If real GDP exceeded potential real GDP and inflation was increasing, which of the following would be an appropriate fiscal policy?
A) an increase in oil prices B) an increase in taxes C) an increase in government spending D) a decrease in the money supply and an increase in the interest rate
Economics
What are some of the main advantages and disadvantages of the extensive financial and commercial networks linking nations today?
What will be an ideal response?
Economics