Question

If the central bank purchases assets​ (e.g., bonds from​ banks), the economic result​ is: A. A decline in the central​ bank's net worth. B. An increase in the money supply. C. An increase in the central​ bank's net worth. D. A decline in the money supply.

Answer 1

B. An increase in the money supply

Step-by-step explanation:

By buying assets, the central bank is increasing the money supply in any economy. This is simply because the central bank is responsible for the supply of money in any economy. Money supply refers to the total value or amount of money present in an economy or country at a particular point in time. It consists of currency and demand deposits. It is a stock concept and its controlled by the central bank of that particular country or economy. So in situation where the central bank makes purchases, it invariably increases the money supply in the country.