Which of the following best explains why the money supply is increased when
the Fed buys Treasury bonds?
A. When the Fed buys Treasury bonds, there are more bonds on
reserve to enable overnight loans.
B. When the Fed buys Treasury bonds, the demand for bond
purchases and for money in general is increased.
C. When the Fed buys Treasury bonds, it increases the amount of
deposits in people's bank accounts,
D. When the Fed buys Treasury bonds, the available supply of bonds
decreases, which drives up bond prices.