Question

if the federal reserve sells 50,000in treasury bonds to a bank at 6% interest ,what is the immediate effect on the money supply

Answer 1

Answer:

if the federal reserve sells 50,000 in treasury bonds to a bank at 6% interest, the immediate effect on the money supply would be; the money supply would decrease by $50,000

Step-by-step explanation:

if the federal reserve sells 50,000 in treasury bonds to a bank at 6% interest, the immediate effect on the money supply would be; the money supply would decrease by $50,000.

The $50,000 will be transferred to the federal reserves and thus not available to be borrowed by the public.