Suppose the Fed Conducts an Open Market Purchase

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.