If the Federal Reserve wants to lower the monetary base and the money supply,it will
A) increase bank reserves.
B) lower the discount rate.
C) sell government securities.
D) lower reserve requirements.

Question

Quizplus · Accepted Answer

Selling government securities reduces the amount of money in circulation and decreases bank reserves, leading to a decrease in the monetary base and money supply. Increasing bank reserves, lowering the discount rate, or lowering reserve requirements would have the opposite effect and increase the monetary base and money supply.

If the Federal Reserve Wants to Lower the Monetary Base