Open market purchases by the central bank can lead to?

Question

A. an increase in the money supply;

B. a reduction in the money supply;

C. a redustion in leading by the banks;

D. a reductions in bank deposits.

Answer 1

If the Central Bank purchases (ANYTHING) with money, it will increase the money supply. If the Central Bank sells any asset it is holding, it will decrease the money supply.

Answer 2

A. An increase in the money supply.