If the Central Bank intends to increase the money supply through open market operations then it will
sell securities in the open market
buy securities in the open market
issues more currency note
withdraw money supply from the market
print more demand deposit
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Buying securities adds money to the system, lowers rates, makes loans easier to obtain, and increases economic activity.
Selling securities removes money from the system, raises rates, makes loans more expensive, and decreases economic activity.
Right answer is B.
Open market operations (OMO) refers to a central bank buying or selling short-term Treasuries and other securities in the open market in order to influence the money supply. ... Selling securities from the central bank's balance sheet removes money from the system, making loans more expensive and increasing rates.
