[Related to the Apply the Concept: "Explaining the Explosion in the Monetary Base"] In July 2020, an article on reuters.com noted that: "The Fed's total balance sheet size rose.... It was largely due to continued purchases of Treasuries and mortgage-backed securities aimed at keeping financial market conditions easy." Why would the Fed's buying Treasury securities and mortgage-backed securities keep "financial market conditions easy"? A. It causes the money supply to decrease, making it easier for banks to lend money. B. It allows the Fed to become profitable, making it easier for them to conduct monetary policy in the future. C. It decreases bank reserves, resulting in lower interest rates, making it easier for banks to remain profitable. 7 D. It increases bank reserves, resulting in lower interest rates, making it easier to borrow and spend in the economy.

[Related to the Apply the Concept: "Explaining the Explosion in the Monetary Base"] In July 2020, an article on reuters.com noted that: "The Fed's total balance sheet size rose .... It was largely due to continued purchases of Treasuries and mortgage-backed securities aimed at keeping financial market conditions easy." Why would the Fed's buying Treasury securities and mortgage-backed securities keep "financial market conditions easy"? A. It causes the money supply to decrease, making it easier for banks to lend monoy. B. It allows the Fed to become profitable, making it easier for them to conduct monetary policy in the future. C. It decreases bank reserves, resulting in lower interest rates, making it easier for banks to remain profitable. D. It increases bank reserves, resulting in lower interest rates, making it easier to borrow and spend in the economy