Final answer:
When the Fed sells securities to the public, it directly decreases the money supply.
Step-by-step explanation:
The impact on the money supply when the Fed sells securities to the public is C. Direct decrease in the money supply.
When the Fed sells securities, such as bonds, to the public, it is essentially taking money out of circulation. This decreases the supply of money in Final answer:
When the Fed sells securities to the public, it directly decreases the money supply.
Step-by-step explanation:
The impact on the money supply when the Fed sells securities to the public is C. Direct decrease in the money supply.
When the Fed sells securities, such as bonds, to the public, it is essentially taking money out of circulation. This decreases the supply of money in the economy. On the other hand, when the Fed buys securities, it increases the money supply by injecting money into the economy.
For example, when the Fed sells $1 million worth of bonds to the public, the buyers pay the Fed with their money. This money is then taken out of circulation, resulting in a direct decrease in the money supply. the economy. On the other hand, when the Fed buys securities, it increases the money supply by injecting money into the economy.
For example, when the Fed sells $1 million worth of bonds to the public, the buyers pay the Fed with their money. This money is then taken out of circulation, resulting in a direct decrease in the money supply.