If the Fed wished to decrease the money supply,it could
A) lower the interest rate on term deposits.
B) lower the interest rate on reverse repurchase agreements.
C) lower the required reserve ratio.
D) raise the interest rate it pays on reserves.

Question

Quizplus · Accepted Answer

Raising the interest rate it pays on reserves encourages banks to hold more reserves, thus reducing the amount of money available for lending and decreasing the money supply.

If the Fed Wished to Decrease the Money Supply,it Could