Which describes the most likely effect of the sale of a new batch of Treasury bonds?

Question

Responses

an increase in unemployment

an increase in unemployment

an increase in the money supply

an increase in the money supply

a reduction in the inflation rate

a reduction in the inflation rate

a decrease in the money supply

Answer 1

The most likely effect of the sale of a new batch of Treasury bonds is:

a decrease in the money supply.

When the government sells Treasury bonds, it is effectively taking money out of circulation in exchange for the bonds. This can lead to a decrease in the money supply as investors pay for these bonds. Additionally, this action can have implications for interest rates and overall economic activity.