Which of the following statements is true?
A)If the Fed wants to decrease money supply, it buys government securities.
B)If the Fed wants to increase money supply, it buys government securities.
C)If the Fed wants to decrease money demand, it buys government securities.
D)If the Fed wants to increase money demand, it buys government securities.

Question

Quizplus · Accepted Answer

When the Federal Reserve (Fed) wants to increase the money supply, it buys government securities in the open market. This action puts more money into the banking system, making more funds available for lending and investment, thereby increasing the overall money supply.

Which of the Following Statements Is True