If the Fed Sells Bonds Through Its Open Market Operations

question 284

Multiple Choice

If the Fed sells bonds through its open market operations, then there is

• A) an increase in the demand for bonds and a rise in the price of existing bonds.
• B) an increase in the supply of bonds and a fall in the price of existing bonds.
• C) a decrease in interest rates because of the increase in the supply of bonds.
• D) a decrease in interest rates because of the decrease in the demand for bonds.