If the Federal Open Market Committee decides to increase the money supply,then the Federal Reserve
A)creates dollars and uses them to purchase government bonds from the public.
B)sells government bonds from its portfolio to the public.
C)creates dollars and uses them to purchase various types of stocks and bonds from the public.
D)sells various types of stocks and bonds from its portfolio to the public.

Question

Quizplus · Accepted Answer

When the Federal Open Market Committee decides to increase the money supply, the Federal Reserve creates new money by purchasing government bonds from the public through open market operations. This increases the amount of money in circulation, which can help stimulate economic growth by making credit more available and reducing interest rates. Therefore, choice A is the correct answer.

If the Federal Open Market Committee Decides to Increase the Money