Suppose the Fed Conducts an Open Market Purchase

question 37

Multiple Choice

Suppose the Fed conducts an open market purchase. We can expect this transaction to

• A) reduce the money supply, increase bond prices, and lower interest rates.
• B) increase the money supply, lower bond prices, and lower interest rates.
• C) increase the money supply, raise bond prices, and lower interest rates.
• D) reduce the money supply, reduce bond prices, and increase interest rates.

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