To increase the money supply,the Federal Reserve could

Question

Quizplus · Accepted Answer

Conducting an open market purchase of Treasury securities would allow the Federal Reserve to inject money into the economy by buying bonds from banks and increasing their reserves. This, in turn, would lead to increased lending and money creation, resulting in an overall increase in the money supply. Options A, C, and E would all have the opposite effect of reducing the money supply, while decreasing income taxes (Option B) would have a more indirect effect on the money supply through its impact on consumer spending and business investment.

To Increase the Money Supply,the Federal Reserve Could