Respuesta :
When a primary dealer sells a government bond to the Federal Reserve, reserves in the banking system increase and the monetary base increase, everything else held constant.
What happens when a primary dealer sells a government bond to the Federal Reserve?
When a primary dealer sells a government bond to the Federal Reserve, it is known as an expansionary monetary policy. An expansionary monetary policy is a policy that increases the money supply in the economy.
An expansionary monetary policy can either be :
- reducing reserve ratio
- an open market sale
To learn more about monetary policies, please check: https://brainly.com/question/25716528
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