Principles of Economics, 7th Edition

Published by South-Western College
ISBN 10: 128516587X
ISBN 13: 978-1-28516-587-5

Chapter 29 - Part X - The Monetary System - Questions for Review - Page 630: 5

Answer

If the Fed is wanting to increase the supply of money with open-market operations they buy bonds. This increases the number of dollars in the public's hands, and this raises the money supply.

Work Step by Step

Buying bonds is expansionary monetary policy and will increase the money supply. This is the definition of expansionary monetary policy.
Update this answer!

You can help us out by revising, improving and updating this answer.

Update this answer

After you claim an answer you’ll have 24 hours to send in a draft. An editor will review the submission and either publish your submission or provide feedback.