Question

If the fed wants to increase the money supply through an open market operation, it will:_____.

a. purchase government securities.
b. sell government securities.
c. first purchase, then sell, government securities.
d. lend more reserves to commercial banks.

Answer 1

Purchase government securities

Step-by-step explanation:

When a central bank wants to increase money supply, a key tool in the open market operation is to sell purchase government securities. With this, they give out money to the economy increasing money supply.