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Author Question: How would the Fed's sale of government bonds on the open market affect the money supply? What ... (Read 26 times)

abern

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on: Jun 30, 2018
How would the Fed's sale of government bonds on the open market affect the money supply?
 
  What will be an ideal response?

Question 2

The balance of payments accounts record all of the following EXCEPT the country's
 
  A) domestic investment.
  B) international lending.
  C) international borrowing.
  D) change in official reserves.
  E) international trading.


shaikhs

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Reply #1 on: Jun 30, 2018
Answer to Question 1

The Fed, by selling bonds, is decreasing the supply of money, because it is taking money out of the hands of people who would otherwise deposit it in a bank, which would in turn loan it out, etc.

Answer to Question 2

A


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