Which of the following is an action that the Fed uses to increase or decrease the money supply?
A)buying or selling Treasury securities in the secondary market
B)adjusting the tax rate imposed on income earned on Treasury securities
C)adjusting the coupon rate on Treasury bonds
D)selling Treasury securities in the primary market

Question

Which of the following is an action that the Fed uses to increase or decrease the money supply? ​
A)buying or selling Treasury securities in the secondary market
B)adjusting the tax rate imposed on income earned on Treasury securities
C)adjusting the coupon rate on Treasury bonds
D)selling Treasury securities in the primary market

Quizplus · Accepted Answer

The Federal Reserve (Fed) uses open market operations, which involve buying or selling Treasury securities in the secondary market, as a primary tool to control the money supply. Buying securities injects money into the banking system, increasing the money supply, while selling securities withdraws money, decreasing the money supply. Options B, C, and D are not actions taken by the Fed to directly influence the money supply.

Which of the Following Is an Action That the Fed