If the Fed wishes to increase the money supply,it could:
A)buy a bond.
B)increase the reserve requirement.
C)increase the discount rate.
D)All of these would increase the money supply.

Question

Quizplus · Accepted Answer

When the Fed buys a bond, it injects money into the economy and increases the money supply. Increasing the reserve requirement and increasing the discount rate have the opposite effect, they decrease the money supply. Therefore, choice A is the best option for increasing the money supply.

If the Fed Wishes to Increase the Money Supply,it Could