What will be the money supply, if the central bank purchases a governament bond fron an individual who deposits all the money that has been received from the sale in the bank
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If the Central Bank buy Government securities (or corporate bonds) people who were holding the bonds have more money to spend. Banks see illiquid assets become liquid. Therefore, in certain circumstances, this can lead to an increase in the money supply.
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What will be the money supply, if the central bank purchases a government bond from an individual who deposits all the money that has been received from the sale in the bank?
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