Why would the US government purchase government securities from private bond holders?
A.
to reduce the money supply and raise interest rates
B.
to increase the money supply and lower interest rates
C.
to reduce the money supply and raise the inflation rate
D.
to increase the money supply and lower the inflation rate
B. to increase the money supply and lower interest rates
By purchasing government securities from private bond holders, the US government injects more money into the economy, leading to an increase in the money supply. This, in turn, can help lower interest rates as there is more money available for borrowing and lending.