Open-market purchases by the Fed make the money supply
A) increase, which tends to increase the value of money.
B) increase, which tends to decrease the value of money.
C) decrease, which tends to decrease the value of money.
D) decrease, which tends to increase the value of money.

Question

Quizplus · Accepted Answer

Open-market purchases by the Fed increase the money supply, which in turn tends to decrease the value of money. This is because when there is more money circulating in the economy, it becomes less scarce and therefore less valuable.

Open-Market Purchases by the Fed Make the Money Supply