Which of the following lists contains only actions that increase the money supply?
A)raise the bank rate; make open market purchases
B)raise the bank rate; make open market sales
C)lower the bank rate; make open market purchases
D)lower the bank rate; make open market sales

Question

Quizplus · Accepted Answer

Lowering the bank rate reduces the cost of borrowing for banks, which in turn encourages them to lend more money, increasing the money supply. Making open market purchases involves the central bank purchasing assets (such as government bonds) from banks, injecting money into the system and increasing the money supply.

Which of the Following Lists Contains Only Actions That Increase