When the Fed buys government securities,it adds to the supply of money and credit,which causes a reduction in interest rates.

Government Securities

Financial instruments issued by a government to finance its projects and operations, typically considered low-risk investments.

Supply of Money

The total amount of money available in an economy at a particular time, encompassing cash, coins, and balances held in checking and savings accounts.

Interest Rates

The cost of borrowing money or the reward for saving, typically expressed as a percentage of the principal amount per period.