To increase the money supply the Fed can:

Question

Quizplus · Accepted Answer

To increase the money supply, the Fed needs to inject more money into the economy. One way to do this is by buying bonds from banks, which increases their reserves and allows them to lend out more money. Additionally, reducing the reserve requirement means that banks need to hold less money in reserve and can lend out more, increasing the money supply. Finally, reducing the discount rate makes it cheaper for banks to borrow money from the Fed, which incentivizes them to borrow more and also increases the overall money supply. Therefore, choice C is the best option as it includes all three measures that can be taken to increase the money supply.

To Increase the Money Supply the Fed Can