Which of the following actions by the Fed would lead to an increase in the money supply?

Question

Quizplus · Accepted Answer

The purchase of government securities by the Fed increases reserves in the banking system, which can then be used to make loans and increase the money supply. Option A would decrease the money supply by requiring banks to hold more reserves, Option B would not have a direct effect on the money supply, and Option C would decrease the money supply by reducing disposable income and spending.

Which of the Following Actions by the Fed Would Lead