Asked by ????????? ?????? on May 08, 2024
Verified
When the Federal Reserve Board sells government securities,the:
A) money supply in the economy decreases.
B) money supply in the economy increases.
C) property taxes increase.
D) property taxes decrease.
E) money supply in the market becomes stable.
Government Securities
Financial instruments issued by a government to finance its public projects, which include bonds, treasury bills, and notes.
Money Supply
Money Supply refers to the total amount of monetary assets available in an economy at a specific time, including cash, coins, and balances held in checking and savings accounts.
- Understand the role of the Federal Reserve Board in regulating the money supply and its impact on the economy.
Verified Answer
EP
Elexius PettigrewMay 13, 2024
Final Answer :
A
Explanation :
When the Federal Reserve Board sells government securities, it effectively removes money from the economy because the buyers of these securities pay the Fed, which reduces the amount of money that the banks have available to lend. This process decreases the money supply in the economy.
Learning Objectives
- Understand the role of the Federal Reserve Board in regulating the money supply and its impact on the economy.