When the Fed Sells Bonds to the Bank and the Public

question 179

Multiple Choice

When the Fed sells bonds to the bank and the public, the expected result is that

• A)the supply of federal funds will fall, the federal funds rate will rise, and a contraction of the money supply will occur.
• B)the supply of federal funds will rise, the federal funds rate will fall, and an expansion of the money supply will occur.
• C)the supply of federal funds will fall, the federal funds rate will fall, and an expansion of the money supply will occur.
• D)the supply of federal funds will rise, the federal funds rate will rise, and a contraction of the money supply will occur.

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Definitions:

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