The money supply has increased from $1.4 trillion to $1.45 trillion. Which of the following could have caused this increase?

Question

Quizplus · Accepted Answer

The increase in the money supply is caused by consumers depositing their money in banks, which in turn increases the amount of money available in the banking system. A would decrease the money supply as the sale of government securities drains money out of the economy, C would also decrease the money supply as the discount rate is increased to discourage borrowing, and D would not affect the money supply as holding excess reserves means that banks are not lending out all of their deposited funds.

The Money Supply Has Increased from $1