The ways the Fed can inject reserves into the banking system include: ?

Question

The ways the Fed can inject reserves into the banking system include: ?

Quizplus · Accepted Answer

The Fed can inject reserves into the banking system by increasing the size of its balance sheet through purchasing securities such as government bonds. This is known as open market operations and is one of the most common tools used by the Fed to either increase or decrease the supply of money in the economy. Increasing the discount rate (B) would actually discourage borrowing by banks and reduce reserves, while making loans to non-bank corporations (C) is not within the Fed's mandate. Selling securities (D) would also reduce reserves in the banking system.

The Ways the Fed Can Inject Reserves into the Banking