What can the Fed increase to increase the supply of money?

Question

Quizplus · Accepted Answer

Open market purchases of government bonds allow the Fed to inject more money into the economy. By buying government bonds from banks, the banks receive more cash reserves from the Fed, which can be used to make more loans and increase the money supply.

Answer: D
 All options are correct. Increasing reserve requirements means banks are required to hold more money in reserve, which reduces the available funds for lending and decreases the money supply. Conversely, lowering reserve requirements allows banks to hold less money in reserve, which increases funds available for lending and increases the money supply. The discount rate is the interest rate at which banks can borrow from the Fed. If the Fed lowers the discount rate, banks are encouraged to borrow and have more available funds for lending, which in turn increases the money supply.

What Can the Fed Increase to Increase the Supply of Money