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If the Federal Reserve Bank buys short-term 6-month State of California bonds, then what is it...

Question:

If the Federal Reserve Bank buys short-term 6-month State of California bonds, then what is it doing? 5 Multiple Choice 8 04:
If the Federal Reserve Bank buys short-term 6-month State of California bonds, then what is it doing? 5 Multiple Choice 8 04:10:49 None of the above. It is decreasing the national money supply. it is increasing the national money supply It is helping to raise the national lending interest rates Prey 5 of 71 !!! Next >

Answers

Answer :(c)

The buying the bond through the open market operation would increase the money supply in the economy. Thus interest rate will decline.

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