The supply of money increases when
A)the price level falls.
B)the interest rate increases.
C)the Fed makes open-market purchases.
D)money demand increases.

Question

Quizplus · Accepted Answer

The supply of money increases when the Federal Reserve (the Fed) makes open-market purchases. This involves buying securities (like government bonds) in the open market, which injects money into the banking system, increasing the overall supply of money.

The Supply of Money Increases When