Which of the following monetary policies will increase money supply?
A)An increase in the discount rate
B)An increase in the reserve requirement
C)Open market purchases by the Fed
D)The Fed selling government bonds
E)An increase in the federal funds rate

Question

Quizplus · Accepted Answer

Open market purchases by the Fed involve the Fed buying government bonds from the public, which increases the amount of money in circulation and thus increases the money supply. The other options either decrease the money supply (options A, B, and D) or have no effect on it (option E).

Which of the Following Monetary Policies Will Increase Money Supply