Which of the following actions by the Fed would cause the money supply to increase?

Name: Which of the following actions by the Fed would cause the money supply to increase?
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Question

Quizplus · Accepted Answer

Purchases of government bonds by the Fed inject money into the banking system, increasing the money supply.

Answer: D 
 Sales of government bonds by the Fed to the public reduce the level of bank reserves, decreasing the money supply.

Therefore, only A causes an increase in the money supply.

Which of the Following Actions by the Fed Would Cause