Which monetary policy would most likely increase aggregate demand?
A) Increasing reserve requirements at commercial banks and thrift institutions.
B) Increasing margin requirements on stock purchases.
C) Purchasing government securities in the open market.
D) Increasing the discount rate.

Question

Quizplus · Accepted Answer

Purchasing government securities in the open market injects money into the economy, lowering interest rates and encouraging borrowing and spending, which increases aggregate demand.

Which Monetary Policy Would Most Likely Increase Aggregate Demand