In an effort to increase the money supply, the Fed might:

Question

Quizplus · Accepted Answer

By decreasing the reserve requirement, banks will be able to lend out more money, which increases the money supply. A higher reserve requirement would decrease the amount of money that banks can lend out, which would decrease the money supply. Opening the discount window longer or increasing the discount rate could also increase the money supply, but these options are less effective than changing the reserve requirement.

In an Effort to Increase the Money Supply, the Fed