Which of these changes is likely to follow when the Fed sells U.S. government securities?
A) Aggregate demand will increase.
B) The demand for financial securities will decrease.
C) Rate of interest will decrease.
D) Planned investment spending will decrease.
E) Real GDP will increase.

Question

Quizplus · Accepted Answer

When the Fed sells U.S. government securities, it reduces the money supply, leading to higher interest rates. Higher interest rates typically result in decreased planned investment spending.

Which of These Changes Is Likely to Follow When the Fed