In countries such as the United States, which of the following strategies might the central bank use to increase the money supply?

Question

Quizplus · Accepted Answer

In order to increase the money supply, the central bank can decrease the reserve requirement, which reduces the amount of reserves that banks are required to hold, thus allowing them to lend out more money. Additionally, the central bank can buy bonds on the open market, which injects money directly into the economy. Selling bonds on the open market, as in choices A and C, would actually decrease the money supply. Increasing the discount rate, as in choices A and D, would discourage banks from borrowing from the central bank and would not necessarily increase the money supply.

In Countries Such as the United States, Which of the Following