Which of the following lists two things that both increase the money supply?
A)lower the discount rate, raise the reserve requirement ratio
B)lower the discount rate, lower the reserve requirement ratio
C)raise the discount rate, raise the reserve requirement ratio
D)raise the discount rate, lower the reserve requirement ratio

Question

Quizplus · Accepted Answer

Lowering the discount rate will encourage banks to borrow more from the Fed, increasing their reserves and allowing them to make more loans, which increases the money supply. Lowering the reserve requirement ratio will also increase banks' ability to make loans, as they are required to hold less in reserves and can lend out more money, which also increases the money supply.

Which of the Following Lists Two Things That Both Increase