Which of the following lists contains only actions that increase the money supply?
A)making open-market purchases; raising the reserve requirement ratio
B)making open-market purchases; lowering the reserve requirement ratio
C)making open-market sales; raising the reserve requirement ratio
D)making open-market sales; lowering the reserve requirement ratio

Question

Quizplus · Accepted Answer

When the Fed makes open-market purchases, it injects money into the system, thus increasing the money supply. When the reserve requirement ratio is lowered, banks are required to keep a lower percentage of deposits as reserves, which frees up more money to be lent out and increases the money supply.

Which of the Following Lists Contains Only Actions That Increase