Fed buys government securities to help finance a budget deficit and to add to bank reserves and increase the money supply.

Name: Fed buys government securities to help finance a budget deficit and to add to bank reserves and increase the money supply.
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Question

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Monetizing the debt refers to the process of the central bank buying government securities to help finance a budget deficit, which increases bank reserves and the money supply. This is often done during times of economic crisis to stimulate the economy.

Fed Buys Government Securities to Help Finance a Budget Deficit