If the Fed buys securities on the open market, it will increase the money supply.

Name: If the Fed buys securities on the open market, it will increase the money supply.
Brand: Quizplus
Rating: 4.9 (51 reviews)

Question

Quizplus · Accepted Answer

When the Fed buys securities on the open market, it increases the amount of money in circulation and therefore increases the money supply. This is because the seller of the security will receive payment in the form of reserves, which can then be used as a basis for new loans or other forms of spending.

If the Fed Buys Securities on the Open Market, It