Which of the following lists two things that both increase the money supply?
A) lower the discount rate,raise the reserve requirement
B) lower the discount rate,lower the reserve requirement
C) raise the discount rate,raise the reserve requirement
D) raise the discount rate,lower the reserve requirement

Question

Quizplus · Accepted Answer

Lowering the discount rate and lowering the reserve requirement both increase the money supply. When the discount rate is lowered, it becomes cheaper for banks to borrow money from the Federal Reserve. This means they will borrow more money and have more to lend out, which increases the money supply. When the reserve requirement is lowered, banks are required to hold less money in reserve, which means they have more to lend out, again increasing the money supply.

Which of the Following Lists Two Things That Both Increase