How can the Federal Reserve actually increase the money supply?
A) by delaying transfer of money among banks
B) by raising the discount rate
C) by doubling the reserve requirement
D) by purchasing more government bonds in the open market

Question

Quizplus · Accepted Answer

The Federal Reserve can increase the money supply by purchasing more government bonds in the open market. This is known as open market operations, where the central bank buys government securities from banks and other financial institutions, leading to an increase in their reserves. This, in turn, allows them to lend more money, thus expanding the money supply in the economy.

How Can the Federal Reserve Actually Increase the Money Supply