When the Fed bonds, it takes money out of the economy and reduces reserves which contracts the money supply, causing interest rates to
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Solution 1
When the Federal Reserve (the Fed) sells bonds, it effectively reduces the amount of money circulating in the economy. Here’s how this process works:
- Mechanism of Selling Bonds: When the Fed sells bonds, financial institutions or investors buy these bonds, paying for them with their reserves Knowee AI is a powerful AI-powered study tool designed to help you to solve study problem.
Knowee AI is a powerful AI-powered study tool designed to help you to solve study problem.
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