Question

If the Fed carries out an open market operation and buys U.S. government​ securities, the federal funds rate​ ________ and the quantity of reserves​ ________.

Answer 1

decreases, increases

Step-by-step explanation:

An open market operation where the government buys securities increases the money supply so the Federal funds rates increases. Because of the increase in money supply, the reserves held by banks would increase.

the federal funds rate​ is the interest rate at which banks can borrow or lend excess reserves overnight