When the Fed wants to expand the money supply through open-market operation, it
A)sells government securities to the Treasury.
B)sells government securities to member banks.
C)buys government securities from member banks.
D)buys government securities from the Treasury.

Question

Quizplus · Accepted Answer

When the Federal Reserve wants to expand the money supply, it buys government securities from member banks. This injects money into the banking system, increasing the amount of funds banks have available to lend, thereby expanding the money supply.

When the Fed Wants to Expand the Money Supply Through