The Central Bank can increase the money supply by

Question

Quizplus · Accepted Answer

Increasing the monetary base by, for example, buying government securities on the open market, directly increases the money supply.

Answer: D 
 Increasing the discount rate makes borrowing from the central bank more expensive, which can decrease the money supply as banks may lend out less. However, this is not a direct way to increase the money supply.

Therefore, only option B is the correct answer as it directly relates to an increase in the money supply.

The Central Bank Can Increase the Money Supply by