Answer: Acts as the lender in a repurchase agreement.

**Explanation:** - **Option A** is correct because when the central bank acts as the lender in a repurchase agreement (repo), it purchases bonds (typically government bonds) from banks with an agreement to sell them back later. This injects liquidity into the banking system, increasing the money supply, which is characteristic of an expansionary monetary policy. - **Option B** is incorrect because selling government bonds to commercial banks reduces the reserves of these banks, limiting their ability to lend. This contractionary action decreases liquidity and money supply growth through the money multiplier effect. - **Option C** is incorrect because raising reserve requirements forces banks to hold more reserves, reducing the funds available for lending. This contractionary measure restricts money creation and decreases the money supply. **Key Concept:** Expansionary monetary policy aims to increase liquidity and stimulate economic activity, often through actions like open market purchases or lowering reserve requirements.

Author: LeetQuiz Editorial Team