If the Fed wanted to increase the money supply,it would make open market
A)purchases and lower the discount rate.
B)sales and lower the discount rate.
C)purchases and raise the discount rate.
D)sales and raise the discount rate.

Question

Quizplus · Accepted Answer

If the Fed wanted to increase the money supply, they would buy securities in the open market which would increase the reserves of commercial banks, leading to an increase in the money supply. Lowering the discount rate would also encourage banks to borrow more from the Fed, further increasing their reserves and the money supply.

If the Fed Wanted to Increase the Money Supply,it Would