In order to decrease the money supply,the Fed can

Question

Quizplus · Accepted Answer

To decrease the money supply, the Fed needs to implement contractionary monetary policy. This can be done by increasing the reserve requirement, increasing the discount rate, or by selling bonds. These actions will reduce the amount of money available for banks to lend, leading to a decrease in the money supply. Option B is incorrect because buying bonds would increase the money supply, which is the opposite of what the Fed wants to do. Option C is incorrect because lowering the reserve requirement would increase the money supply, which is the opposite of the intended goal. Option D is incorrect because decreasing the discount rate would encourage borrowing and increase the money supply.

In Order to Decrease the Money Supply,the Fed Can