Expanding Monetary Policy for the Fed: CFA® Level 1 Exam Prep

Expansionary Monetary Policy

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Question

If the Fed wanted a more expansionary monetary policy, which of the following would be most appropriate?

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Explanations

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A. B. C. D.

C

To expand the money supply the Fed may buy government bonds from the public. This action injects money into the economy because individuals who formerly held U.S. security notes now hold money balances.