The most common method employed by the Fed to increase the money supply is the
A)sale of U.S.government bonds.
B)purchase of U.S.government bonds.
C)sale of gold.
D)increase of the federal debt ceiling.

Question

Quizplus · Accepted Answer

The most common method employed by the Fed to increase the money supply is through the purchase of U.S. government bonds. This process is known as open market operations, where the Fed purchases bonds from banks and in exchange credits their accounts with newly created money. This increase in the banks' reserves allows them to lend out more money, effectively increasing the money supply.

The Most Common Method Employed by the Fed to Increase