Which of the following means of financing federal government spending will increase the monetary base?
A)Raising the corporate income tax
B)Raising the personal income tax
C)Selling bonds to the public
D)Selling bonds to the Fed

Question

Quizplus · Accepted Answer

Selling bonds to the Fed increases the monetary base because it involves the creation of new money. When the Fed purchases bonds, it pays for them by creating new reserves in the banking system, effectively increasing the money supply.

Which of the Following Means of Financing Federal Government Spending