Asked by Victoria Rodriguez on Apr 25, 2024
Verified
When the Fed sells government securities,banks have __________ money to lend and economic growth
A) less; will slow
B) less; will accelerate
C) more; will slow
D) more; will accelerate
Government Securities
Financial instruments issued by a government to finance its operations, often considered low-risk investments.
Economic Growth
An increase in the production of goods and services in an economy over a period of time, reflecting an improvement in the standard of living.
- Understand how federal monetary policies affect economic growth, interest rates, and the availability of credit.
Verified Answer
NC
Nicklaus Chong7 days ago
Final Answer :
A
Explanation :
When the Federal Reserve sells government securities, it effectively removes money from the banking system because banks purchase these securities with cash. This reduces the amount of money banks have available to lend, which can lead to a slowing of economic growth as borrowing costs increase and less capital is available for investment.
Learning Objectives
- Understand how federal monetary policies affect economic growth, interest rates, and the availability of credit.
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