What can the Fed do to decrease the supply of money?
A)open market purchases of government bonds
B)increase reserve requirements
C)decrease the discount rate
D)any of the above

Question

What can the Fed do to decrease the supply of money?
A)​open market purchases of government bonds
B)​increase reserve requirements
C)​decrease the discount rate
D)​any of the above

Quizplus · Accepted Answer

By increasing the reserve requirements, the Fed can reduce the amount of money banks can lend out, effectively decreasing the supply of money in the economy. Open market purchases of government bonds and decreasing the discount rate would both increase the supply of money.

What Can the Fed Do to Decrease the Supply of Money