Questions: If the Federal Reserve sells government securities to banks, it is engaging in monetary policy expansionary contractionary

The answer is: contractionary monetary policy.

Explanation:

1. Contractionary Monetary Policy: When the Federal Reserve sells government securities to banks, it is engaging in contractionary monetary policy. This action reduces the reserves of the banks, which in turn decreases the money supply in the economy. With fewer reserves, banks have less capacity to lend money, leading to higher interest rates and reduced borrowing and spending. This is typically done to combat inflation.

2. Expansionary Monetary Policy: This involves actions that increase the money supply in the economy, such as the Federal Reserve buying government securities from banks. This increases the reserves of the banks, allowing them to lend more money, which lowers interest rates and stimulates borrowing and spending. This is typically done to combat recession or stimulate economic growth.

In summary, the Federal Reserve selling government securities to banks is a measure to reduce the money supply, which is characteristic of contractionary monetary policy.