Asked by
Bandar Alanzi
on Nov 11, 2024
Verified
If the Fed sells U.S.government securities to drain reserves from banks,which of the following is most likely to occur?
A) The demand for money will increase and the interest rate will rise.
B) The money supply will increase and the interest rate will fall.
C) The interest rate will rise and the quantity of money demanded will fall.
D) The money supply will decrease and the interest rate will fall.
E) The interest rate will fall and the quantity of money demanded will increase.
U.S. Government Securities
Fixed-income investments backed by the full faith and credit of the United States government, including Treasury bills, notes, and bonds.
Money Supply
The total amount of monetary assets available in an economy at any specific time.
Interest Rate
The expense, quantified as a percentage of the principal, charged by a lender to a borrower for the use of resources.
- Examine the effects of variations in the monetary supply on interest rates and the expenditure on investments.
Verified Answer
NH
Learning Objectives
- Examine the effects of variations in the monetary supply on interest rates and the expenditure on investments.