If the Fed wanted to increase the money supply,it would make open market
A) purchases or lower the discount rate.
B) sales or lower the discount rate.
C) purchases or raise the discount rate.
D) sales or raise the discount rate.

Question

Quizplus · Accepted Answer

To increase the money supply, the Fed can buy securities in the open market, which injects new money into the economy and increases the money supply. Lowering the discount rate also encourages banks to borrow more from the Fed and lend more to consumers, which can also increase the money supply. Selling securities or raising the discount rate would have the opposite effect, decreasing the money supply.

If the Fed Wanted to Increase the Money Supply,it Would