Question

Explain how to use an open market operation to expand the money supply.

Short answer

As a result it will increase the money supply by increasing the excess reserves.

Step-by-step solution

Concept Preface 

Monetary Policy
It's principally the policy created by the financial authority of a country (like the Fed in the USA or central bank) to control either the plutocrat force or the cost of short- term loans. It's frequently targeted towards controlling affectation rate or interest rate for icing price and currency stability.

:Explanation of Solution

The Federal Reserve System is principally the central bank of the USA engaged in making opinions regarding money force. It not only decides whether to lower or raise interest rates and, influence macroeconomic policy but also regulates the nation's banking system to ensure the health of the bank's balance distance and cover bank depositors.
One of the most important functions of'The Fed'is to conduct the financial policy of the nation. To achieve this, the central bank implements the three traditional tools similar as Open Market Operations, changing reserve conditions, and Changing the reduction rate.
To expand the money force, the Fed specifically uses Open Market Operations as a tool. The Fed sells or buys theU.S. storeroom bonds to impact the interest levelsand produce redundant reserves. Hence, as a result it'll increase the plutocrat force by adding the redundant reserves.