Question

if the government were to buy back securities from the public, what would be the effect on the money supply?
the money supply would suffer from deflation.
the money supply would stay the same.
the money supply would decrease.
the money supply would increase.

Explanation:

When the government buys back securities from the public, it pays out money in exchange. This injects money into the economy, increasing the amount of money in circulation.

Answer:

The money supply would increase.