When the Federal Reserve buys bonds on the open market, it decreases the money supply.

Name: When the Federal Reserve buys bonds on the open market, it decreases the money supply.
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When the Federal Reserve buys bonds on the open market, it increases the money supply. This is because the process involves the creation of new money by the Fed, which it uses to purchase the bonds. This injection of new money into the economy increases the overall money supply.

When the Federal Reserve Buys Bonds on the Open Market