When the fed buys government securities, banks' reserves decrease, the quantity of money decreases, and the federal funds rate rises.
Federal funds, often referred to as federal funds, are excess reserves that commercial banks and other financial institutions deposit with regional Federal Reserve banks. These funds can be lent to other market participants who do not have sufficient cash on hand to meet their borrowing and reserve needs.
In the United States, federal funds are overnight loans made between banks and other entities to deposit reserves with the Federal Reserve. Banks hold reserves at the Federal Reserve to meet reserve requirements and process financial transactions
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