To increase the quantity of money in the economy, the Federal Reserve is likely to

Question

Quizplus · Accepted Answer

To increase the quantity of money in the economy, the Federal Reserve will buy government securities in an open market operation. This means that the Fed will purchase government securities from banks and other financial institutions, increasing the amount of money in their reserves and allowing them to lend out more money. This increase in lending can lead to more spending and investment in the economy, ultimately resulting in an increase in the overall quantity of money in circulation. Lowering tax rates or printing more money and giving it to banks are not effective ways for the Federal Reserve to increase the quantity of money in the economy.

To Increase the Quantity of Money in the Economy, the Federal