To increase the money supply in the economy, the Fed would

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Quizplus · Accepted Answer

The Fed can increase the money supply in the economy through open market purchases, which involves buying government securities from banks and other financial institutions, increasing their reserves and enabling them to lend more. This will increase the money supply as more funds are available in the banking system. Lowering the discount rate also makes it cheaper for banks to borrow from the Fed, which can encourage them to lend more and increase the money supply. Therefore, carrying out open market purchases and lowering the discount rate are both effective tools for increasing the money supply in the economy.

To Increase the Money Supply in the Economy, the Fed