When Governments in Developing Countries Run Budget Deficits, Central Banks

Multiple Choice

When governments in developing countries run budget deficits, central banks in these countries typically:

A) buy the bonds issued by the government and increase the money supply in the process.
B) buy the bonds issued by the government and decrease the money supply in the process.
C) sell the bonds issued by the government and increase the money supply in the process.
D) sell the bonds issued by the government and decrease the money supply in the process.