When the Fed conducts open-market purchases,
A) it buys Treasury securities,which increases the money supply.
B) it buys Treasury securities,which decreases the money supply.
C) banks buy Treasury securities from Fed,which increases the money supply.
D) banks buy Treasury securities from the Fed,which decreases the money supply.

Question

Quizplus · Accepted Answer

When the Fed conducts open-market purchases, it buys Treasury securities from the public, injecting new money into the economy and increasing the money supply. This also leads to a decrease in interest rates and can encourage borrowing and investment.

When the Fed Conducts Open-Market Purchases