If the Fed wants to decrease the money supply,it will:
A) buy government bonds.
B) lower the discount rate on lending.
C) set up the Term Auction Facility.
D) increase the rate of interest paid on reserves.

Question

Quizplus · Accepted Answer

Increasing the rate of interest paid on reserves encourages banks to hold more reserves instead of lending them out, which decreases the money supply.

If the Fed Wants to Decrease the Money Supply,it Will