To increase the money supply,the Fed could

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 to auction more loans to banks. Banks can use these loans to lend money to businesses and individuals, which increases the overall money supply in the economy. Selling government bonds would decrease the money supply, while increasing the reserve requirement would decrease the bank's capacity to lend money, also decreasing the money supply. Therefore, the best choice is B, to auction more loans to banks.

To Increase the Money Supply,the Fed Could