Question

The Federal Reserve comes to the conclusion that more money must be pumped into the economy in an effort to stimulate economic growth.
Which of the following actions could the Fed take that would result in increasing the money supply?

A) Buy securities (bonds)

B) Sell securities (bonds)

C) Raise the reserve requirement

D) Raise the discount rate

Answer 1

Yes the correct answer was  

A. Buy securities ( bonds)

Answer 2

The answer is: B) Buying securities (Bonds)

Money supply refers to the amount of money that circulated in the country. When government buy securities from the private sector, the money would be exchanged from the government's purse to the private sector's. If this occurs, the amount of money that circulated would be increased.