Which of the following would cause the money supply in the United States to expand?
A) A decrease in reserve requirements.
B) An increase in the discount rate.
C) The sale of U.S. government bonds by a Federal Reserve bank.
D) An increase in the world supply of gold.

Question

Quizplus · Accepted Answer

A decrease in reserve requirements would allow banks to lend more money, thereby increasing the money supply.

Answer: D 
 An increase in the world supply of gold could lead to an increase in the domestic money supply if the government or private banks choose to use the gold to back their currency. However, this is a less direct cause compared to choice A.

Which of the Following Would Cause the Money Supply in the United