If less monetary restraint is needed, the Fed's Trading Desk will sell securities until nonborrowed reserves decline by an amount the Federal Reserve has targeted.

Question

Quizplus · Accepted Answer

If less monetary restraint is needed, the Fed's Trading Desk will buy securities to increase the amount of reserves in the banking system, not sell them. Selling securities would decrease nonborrowed reserves, which is contrary to easing monetary policy.

If Less Monetary Restraint Is Needed, the Fed's Trading Desk