Question

If the Federal Reserve sells $30,000 in Treasury bonds to a bank at 4% interest, what is the immediate effect on the money supply?

Answer 1

Decreases by 30,000

Explanation:

Answer 2

Now, as for the other part, the question is vague here. It does not specify whether "money supply" refers to the money in the government (therefore it would increase) or if it refers to the public (in which case it decreases). it is decreased by $30,000.