The Federal Reserve System could increase the money supply by

Question

Quizplus · Accepted Answer

By reducing reserve requirements and lowering discount rates, banks will be able to borrow more money from the Federal Reserve and create more loans, thereby increasing the money supply in circulation. Selling United States bonds by the Federal Reserve reduces the money supply. Increasing marginal tax rates and raising discount rates will also reduce the money supply. Rationing consumer credit is a method for controlling the use of credit and does not directly affect the money supply.

The Federal Reserve System Could Increase the Money Supply by