If the Federal Reserve is engaging in open market operations designed to expand the money supply, it is probably
A) selling government securities to banks.
B) selling government securities to the public.
C) buying government securities from the public.
D) encouraging banks to exchange their Fed deposits for currency.

Question

Quizplus · Accepted Answer

When the Federal Reserve engages in open market operations designed to expand the money supply, it buys government securities from the public. This increases the reserves of banks, which in turn allows them to increase their lending and stimulate the economy.

If the Federal Reserve Is Engaging in Open Market Operations