To increase the money supply,the Fed can

Question

Quizplus · Accepted Answer

To increase the money supply, the Fed can buy government bonds or decrease the discount rate. Buying government bonds from banks puts more money into circulation, increasing the money supply. Decreasing the discount rate makes it cheaper for banks to borrow money from the Fed, encouraging more lending and increasing the money supply. Selling government bonds or increasing the discount rate would have the opposite effect, decreasing the money supply.

To Increase the Money Supply,the Fed Can