"The Federal Reserve has been aggressively expanding the money supply by using repurchase agreements in its open market operations. Ignoring other factors, this is likely to result in:"

Increased Inflation and Reduced Interest Rates.

Explanation:

If the Fed is increasing the monetary supply in the Economy through Open Market Operations it will have the effect of increasing inflation.

A higher amount of money in the Economy usually leads to an increase in inflation because more people have money in their hands and as a result Demand increases. If supply remains the same the prices must increase.

Interest rates however will reduce because there is now a high supply of money in the Economy. Higher supply means lower price to get money which is the interest rate.

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explanation:

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