To expand the money supply, the Fed should

Name: To expand the money supply, the Fed should
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Question

Quizplus · Accepted Answer

When the Fed buys U.S. government securities, it injects money into the economy, increasing the money supply. Selling securities would have the opposite effect, decreasing the money supply. Raising the reserve ratio would reduce the amount of money banks can lend out, thus also decreasing the money supply. Cutting taxes is a fiscal policy measure, not a monetary policy tool used by the Fed.

To Expand the Money Supply, the Fed Should