Which of the following actions by the Fed would increase the money supply?
A) Reducing the required reserve ratio.
B) Selling government bonds in the open market.
C) Increasing the discount rate.
D) None of the above.

Question

Quizplus · Accepted Answer

Reducing the required reserve ratio would increase the amount of money that banks can lend out, thus increasing the money supply. Selling government bonds in the open market would decrease the amount of money in circulation, and increasing the discount rate would make it more expensive for banks to borrow money from the Fed, leading to a decrease in lending and the money supply.

Which of the Following Actions by the Fed Would Increase