Which of the following will the Federal Reserve do in order to increase the money supply?

Question

Quizplus · Accepted Answer

The Federal Reserve can increase the money supply by buying government bonds from financial institutions. When it does this, it gives the financial institutions more money to lend out, increasing the supply of money in the economy. Selling government bonds, buying corporate bonds, and selling common stock would all decrease the money supply. Increasing the salaries of its governors would not directly affect the money supply.

Which of the Following Will the Federal Reserve Do in Order