The Federal Reserve may increase the money supply by:

Question

Quizplus · Accepted Answer

When the Federal Reserve lends reserves to banks, it increases the amount of money available in the economy, thus increasing the money supply. Selling bonds to member banks or securities dealers would not necessarily increase the money supply, as it just transfers funds from one entity to another. Increasing required reserve ratios and increasing the discount rate would both likely decrease the money supply.

The Federal Reserve May Increase the Money Supply By