Which of the following is an appropriate policy for the Fed to pursue if it wants to increase the money supply?

Question

Quizplus · Accepted Answer

Buying U.S. Treasury bills is a typical open market operation conducted by the Fed to increase the money supply. It involves the Fed purchasing Treasury bills from banks, which increases the bank's reserves and allows them to lend out more money, thus increasing the overall money supply. Raising the reserve requirement and discount rate would decrease the money supply, and lowering taxes is a fiscal policy tool not within the jurisdiction of the Fed.

Which of the Following Is an Appropriate Policy for the Fed