If the Fed wants to decrease the money supply,it can __________ the required reserve ratio,conduct an open market __________,or __________ the discount rate.
A) raise; purchase; lower
B) lower; purchase; lower
C) raise; sale; raise
D) lower; sale; lower
E) none of the above

Question

Quizplus · Accepted Answer

If the Fed wants to decrease the money supply, it can adopt contractionary monetary policy measures such as raising the required reserve ratio, conducting an open market sale, or raising the discount rate. These measures would reduce the amount of money available in the economy and make borrowing more expensive, thereby slowing down economic activity and decreasing inflation. Option C is the correct choice as it includes all the correct measures for contractionary monetary policy.

If the Fed Wants to Decrease the Money Supply,it Can