The Federal Reserve may choose to monetize the debt in order to
A)reduce the burden of the national debt.
B)shift the supply curve of money outward.
C)shift the demand curve for money inward.
D)reduce the volume of reserves in commercial banks.

Question

Quizplus · Accepted Answer

Monetizing the debt means that the Federal Reserve buys government securities, such as bonds, in order to increase the supply of money in the economy. This increase in the money supply can shift the supply curve for money outward, which can lead to lower interest rates and stimulate economic growth.

The Federal Reserve May Choose to Monetize the Debt in Order