Which of the following would the Fed increase in order increase the supply of money?
A)open market purchases of government bonds
B)reserve requirements
C)discount rate
D)all of the above

Question

Which of the following would the Fed increase in order increase the supply of money?
A)​open market purchases of government bonds
B)​reserve requirements
C)​discount rate
D)​all of the above

Quizplus · Accepted Answer

When the Fed engages in open market purchases of government bonds, it injects money into the economy, thus increasing the supply of money. Changing reserve requirements or the discount rate can also impact the money supply, but they may have opposite effects depending on the situation, so it is not accurate to say that increasing them would necessarily increase the supply of money.

Which of the Following Would the Fed Increase in Order