If the Federal Reserve tightens the money supply, other things held constant, short term interest rates will be pushed upward, and this increase probably will be greater than the increase in rates in the long term market T/F
When the Fed tightens the money supply, it is carrying out a contractionary monetary policy. This is generally done to fight high inflation rates and basically what happens is that the Fed increases the interest rates and starts selling more securities so that it can absorb more money, therefore reducing total money supply.
