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Question
When the Fed sells government securities,
A) reserves increase, leading to a decrease in the money supply by an amount more than the sale of the government securities.
B) reserves decrease, leading to a increase in the money supply by an amount more than the sale of the government securities.
C) reserves increase, leading to a increase in the money supply by an amount more than the sale of the government securities.
D) reserves decrease, leading to a decrease in the money supply by an amount more than the sale of the government securities.
Answer
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