If the Fed buys government bonds on the open market,which of the following will occur?

Question

Quizplus · Accepted Answer

When the Federal Reserve buys government bonds on the open market, it injects money into the economy, increasing the money supply. This increase in the money supply leads to a decrease in interest rates, making it cheaper to borrow money. Thus, the interest rate will fall. This can stimulate investment spending as it becomes cheaper for firms to borrow the funds they need to finance new investments.

If the Fed Buys Government Bonds on the Open Market,which