question archive When the Fed makes an open market purchase of government securities, the quantity of money will eventually decrease by a fraction of the initial change in the monetary base
When the Fed makes an open market purchase of government securities, the quantity of money will eventually decrease by a fraction of the initial change in the monetary base
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When the Fed makes an open market purchase of government securities, the quantity of money will eventually decrease by a fraction of the initial change in the monetary base.
Is the previous statement correct or incorrect? Explain your answer.
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Incorrect, if fed Makes an open market puchase of government securities then it means that fed is injecting liquidity into the economy, which will increase the money supply or quantity of money as compared to the previous monetary base
