In the 1970s, in response to recessions caused by an increase in the price of oil, the central banks in many countries increased the money supply. How might the central banks have done this?
A) by selling bonds on the open market, which would have raised the value of money
B) by purchasing bonds on the open market, which would have raised the value of money
C) by selling bonds on the open market, which would have lowered the value of money
D) by purchasing bonds on the open market, which would have lowered the value of money

Question

Quizplus · Accepted Answer

To increase the money supply, central banks would typically purchase bonds on the open market. This would increase the amount of money in circulation and lower the value of money.

In the 1970s, in Response to Recessions Caused by an Increase