To increase the money supply, the Fed purchases government securities from banks, paying for them with new reserves.

Name: To increase the money supply, the Fed purchases government securities from banks, paying for them with new reserves.
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When the Fed purchases government securities from banks, it pays for them with new reserves which increase the banks' reserves and allows them to lend out more money, thereby increasing the money supply.

To Increase the Money Supply, the Fed Purchases Government Securities