Which of the following increases when the Fed makes open-market sales?
A)currency and reserves
B)currency but not reserves
C)reserves but not currency
D)neither currency nor reserves

Question

Quizplus · Accepted Answer

When the Fed makes open-market sales, it sells government securities, which decreases the reserves in the banking system as banks pay for these securities, thus reducing the money supply. Neither currency nor reserves increase in this process.

Which of the Following Increases When the Fed Makes Open-Market