All else being equal,if a central bank buys government bonds from the market it would:
A) increase the money supply.
B) increase interest rates.
C) mean savings in the economy are likely to increase.
D) mean the supply of loanable funds would move to the left.

Question

Quizplus · Accepted Answer

When the central bank buys government bonds from the market, it injects money into the economy, increasing the money supply. The increase in money supply leads to a decrease in interest rates as demand for credit increases, making it cheaper for individuals to borrow. This can ultimately boost economic growth and stimulate investments.

All Else Being Equal,if a Central Bank Buys Government Bonds