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24 February, 00:48

If the Federal Reserve sells $30,000 in Treasury bonds to a bank at 4% interest, what is the immediate effect on the money supply?

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  1. 24 February, 00:50
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    Now, as for the other part, the question is vague here. It does not specify whether "money supply" refers to the money in the government (therefore it would increase) or if it refers to the public (in which case it decreases). it is decreased by $30,000.
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