If the Federal Open Market Committee conducts an open market purchase:

Question

Quizplus · Accepted Answer

An open market purchase by the Federal Open Market Committee (FOMC) increases the money supply by buying securities from banks and increasing their reserves. This leads to a surplus of reserves in the banking system, which in turn puts downward pressure on interest rates. Therefore, interest rates will fall as a result of an open market purchase by the FOMC.

If the Federal Open Market Committee Conducts an Open Market