When the Fed engages in a tight money policy,the price of government bonds tend to

A) fall.
B) rise.
C) remain constant.
D) move in the same direction as the bonds' market interest rate return.

When the Fed engages in a tight money policy, it reduces the money supply by raising interest rates. This makes borrowing more expensive, which in turn reduces demand for goods and services in the economy. As a result, bond prices tend to fall because investors seek higher returns on their investments due to the decreased demand for borrowing. The rise in interest rates makes newer bonds more attractive to investors, reducing demand for older bonds, which causes their price to fall.