When the fed sells government securities

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Reference no: EM13685053

When the Fed sells government securities, it:

1- Increases the amount of excess reserves that banks hold, discouraging them from making loans to the general public.

2- Increases the amount of excess reserves that banks hold, encouraging them to make loans to the general public.

3- Decreases the amount of excess reserves that banks hold, discouraging them from making loans to the general public.

4- Raises the cost of borrowing from the Fed, discouraging banks from making loans to the general public.

5- Lowers the cost of borrowing from the Fed, encouraging banks to make loans to the general public.

Reference no: EM13685053

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