Which of the following is the most likely direct consequence of a central bank undertaking a sustained program of quantitative tightening (QT) through the sale of government bonds to the secondary market?
A fall in government bond yields, lowering the cost of borrowing for firms.
An increase in commercial bank reserves, stimulating the creation of bank deposits.
A decrease in government bond prices and a corresponding rise in long-term interest rates.
A depreciation of the domestic currency due to net capital outflows.
