If the central bank wants to reduce interest rates in the nation through open market operations, it would:
A) buy bonds.
B) sell bonds.
C) increase the reserve requirement.
D) decrease the reserve requirement.

Question

Quizplus · Accepted Answer

When the central bank buys bonds through open market operations, it increases the money supply in the economy. This increase in money supply leads to lower interest rates, as there is more money available for banks to lend.

If the Central Bank Wants to Reduce Interest Rates in the Nation