If the Fed were to use all the currently operational tools of monetary policy to pursue an easy-money policy, it would:

Question

Quizplus · Accepted Answer

An easy-money policy aims to increase the money supply and lower interest rates to stimulate economic activity. Lowering reserve requirements increases banks' ability to lend, lowering the discount rate makes it cheaper for banks to borrow from the Fed, buying securities in the open market increases the money supply, lowering interest rates on reserves encourages banks to lend more, and making fewer term deposits available increases liquidity in the banking system. All these actions are consistent with an easy-money policy.

If the Fed Were to Use All the Currently Operational