Which of the following lists two things that both decrease the money supply?
A) make open market purchases,raise the reserve requirement
B) make open market purchases,lower the reserve requirement
C) make open market sales,raise the reserve requirement
D) make open market sales,lower the reserve requirement

Question

Quizplus · Accepted Answer

When the Federal Reserve makes open market sales, it means they are selling government bonds to banks, which decreases the amount of money banks have available to lend out. This decreases the money supply. Similarly, when the reserve requirement is raised, it means that banks are required to hold onto more of their deposits instead of lending them out, which also decreases the amount of money available in the system. Therefore, choice C correctly lists two things that both decrease the money supply.

Which of the Following Lists Two Things That Both Decrease