Which of the following lists two things that both increase the money supply?
A) The Fed buys bonds and lowers the discount rate.
B) The Fed buys bonds and raises the discount rate.
C) The Fed sells bonds and lowers the discount rate.
D) The Fed sells bonds and raises the discount rate.

Question

Quizplus · Accepted Answer

When the Fed buys bonds, it injects money into the economy, increasing the money supply. Lowering the discount rate also encourages banks to borrow more money from the Fed, which increases the money supply.

Which of the Following Lists Two Things That Both Increase