When the Fed wishes to increase the reserves of the member banks,it

Question

Quizplus · Accepted Answer

When the Fed buys securities, it injects new money into the economy and increases the reserves of the member banks. This increases the amount of money available for lending, which can stimulate economic activity. Raising the reserve requirement or discount rate, on the other hand, would reduce the amount of money that banks can lend out, which could have a contractionary effect on the economy.

When the Fed Wishes to Increase the Reserves of the Member