Which of the following lists contains only actions that decrease the money supply?
A)make open market purchases; raise the reserve requirement ratio
B)make open market purchases; lower the reserve requirement ratio
C)make open market sales; raise the reserve requirement ratio
D)make open market sales; lower the reserve requirement ratio

Question

Quizplus · Accepted Answer

Making open market sales means that the central bank is selling government securities which takes money out of circulation and decreases the money supply. Raising the reserve requirement ratio also decreases the money supply as it requires banks to hold a higher percentage of their deposits in reserves, leaving less money available for lending and spending.

Which of the Following Lists Contains Only Actions That Decrease