If you hear in the news that the Federal Reserve conducted open-market purchases, then you should expect ______ to increase.
A) reserve requirements
B) the discount rate
C) the money supply
D) the reserve-deposit ratio

Question

Quizplus · Accepted Answer

Open-market purchases involve the Federal Reserve buying securities from banks, which in turn increases the reserves of the banks. This increases the ability of banks to lend out money, which leads to an increase in the overall money supply.

If You Hear in the News That the Federal Reserve