To increase the money supply,the Federal Reserve could do which of the following?

Question

Quizplus · Accepted Answer

The Federal Reserve can increase the money supply by conducting an open market purchase of government bonds. This involves the Fed buying bonds from banks, which increases banks' reserves and allows them to lend out more money. This increase in lending means more money is in circulation, thus increasing the money supply. The other options (A, B, C, and D) would all decrease the money supply.

To Increase the Money Supply,the Federal Reserve Could Do Which