If the Fed was to use all of its major domestic monetary control tools to increase the money supply, it would:

Question

Quizplus · Accepted Answer

If the Fed wanted to increase the money supply, it would use expansionary monetary policy, which involves buying bonds from banks. This increases the reserves of banks, allowing them to lend out more money, which in turn increases the money supply. Additionally, reducing the discount rate makes it easier for banks to borrow from the Fed, which also increases reserves and lending. Finally, reducing reserve requirements means banks can hold less in reserves and lend out more money, also increasing the money supply. Therefore, the correct choice is A.

If the Fed Was to Use All of Its Major