If the Fed wishes to reduce the money supply,it can do all of the following except

Question

Quizplus · Accepted Answer

The Fed can reduce the money supply by raising the discount rate and/or the minimum reserve ratio, as these measures increase the cost of borrowing and reduce the amount of money banks can lend out. The Fed can also sell securities on the open market, which reduces the amount of money in circulation. However, buying shares of common stock in a large bank does not directly impact the money supply and therefore cannot be used to reduce it.

If the Fed Wishes to Reduce the Money Supply,it Can