If the Fed wants to increase the money supply,it can __________ the required reserve ratio,conduct an open market __________,or __________the discount rate.
A) lower; sale; raise
B) lower; purchase; raise
C) lower; purchase; lower
D) raise; sale; lower
E) raise; purchase; raise

Question

Quizplus · Accepted Answer

If the Fed wants to increase the money supply, it needs to implement expansionary monetary policy. It can do this by lowering the required reserve ratio, which will increase the amount of excess reserves that banks have available to lend out. Additionally, the Fed can conduct open market purchases, which involve buying securities from banks and injecting new money into the economy. Finally, the Fed can also lower the discount rate, which makes it cheaper for banks to borrow from the Fed and encourages them to lend more. Therefore, the best choice is C since it includes all three expansionary policy tools.

If the Fed Wants to Increase the Money Supply,it Can