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Question 17 When the Federal Reserve purchases a Treasury security on the open market, the money supply and the federal funds
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Answer #1

When Fed purchase the security in the Market, it is basically supply the money in the market i.e. increasing the money supply in the market and By increasing the amount of money in the system it can cause interest rates to fall; by decreasing the money supply it can make interest rates rise

Option B is correct. increase, increase.

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