An open market ________ by the Fed increases the money supply, which leads to ________ interest rates and increased GDP.
A) purchase; increased
B) purchase; decreased
C) sale; increased
D) sale; decreased

Question

Quizplus · Accepted Answer

An open market purchase by the Fed increases the money supply, which typically leads to decreased interest rates. Lower interest rates make borrowing cheaper, encouraging investment and spending, which can lead to an increase in GDP.

An Open Market ________ by the Fed Increases the Money