Which of the following actions is most likely to lead to an increase in the money supply?
A) Fed purchases of government securities
B) an increase in the required reserve ratio
C) an increase in the discount rate
D) none of the above

Question

Quizplus · Accepted Answer

Fed purchases of government securities injects new money into the economy, thus increasing the money supply. An increase in the required reserve ratio or an increase in the discount rate would reduce the amount of money available for lending by banks, thus decreasing the money supply.

Which of the Following Actions Is Most Likely to Lead