If the Federal Reserve wished to engage in expansionary monetary policy it could

Question

Quizplus · Accepted Answer

Lowering the federal funds rate target would make it cheaper for banks to borrow money from the Federal Reserve, thus increasing the money supply and stimulating economic activity. Raising the primary credit rate or the reserve ratio would have the opposite effect and decrease the money supply, while selling government debt would not necessarily impact the money supply but would decrease the amount of investments held by banks and potentially slow economic growth.

If the Federal Reserve Wished to Engage in Expansionary Monetary