When the Fed buys government securities, there is less money in the economy available for investment, purchases, or lending.

Question

Quizplus · Accepted Answer

When the Fed buys government securities, it actually injects more money into the economy, making it more available for investment, purchases, or lending. This is because the Fed pays for the securities with newly created money, increasing the amount of money in circulation.

When the Fed Buys Government Securities, There Is Less Money