If the federal reserve sells $70,000 in treasury bonds to a bank at a 9% interest rate what is the immediate effect on the money supply? a it is decreased by $70,000 b is it increased by $70,000 c) it is increased by $76,300 d) it is decreased by $76,300

Answer : A it is decreased by $70,000

Federal reserve sells $70,000 in treasury bonds to a bank.

Removing cash decreases the money supply . Money supply decreases when exchanging for bonds. That is the immediate effect on money supply.

Federal reserve sells $70,000 . so money supply is decreased by $70,000

1/4 and 8/3 because:

the reciprocal if 4 is 1/4 because 4 is used as 4/1 and the opposite of that is 1/4. the opposite of 3/8 is 8/3 so that is the answer.