An open market purchase occurs when the Fed

Name: An open market purchase occurs when the Fed
Brand: Quizplus
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Question

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In an open market purchase, the Fed buys bonds from the public, which increases the money supply and therefore increases bank reserves. This is because the Fed pays for the bonds by increasing the reserve balances of the banks that previously held the bonds, which increases their ability to lend out money.

An Open Market Purchase Occurs When the Fed