Question: Did the money supply in the economy increase or decrease after the $ 700 million purchase by the Fed? Explain. The Fed decides to buy

Did the money supply in the economy increase or decrease after the $ 700 million purchase by the Fed? Explain.

The Fed decides to buy $700 million of government bonds from Citibank. What is the tool of monetary represented by this procedure executed by the Fed?

1. adjusting reserve question
2. changing the discount rate
3. open market operation
4. changing the Federal Funds target rate

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