Which of the following represents an action by the Federal Reserve that is designed to increase the money supply?

Question

Quizplus · Accepted Answer

When the Federal Reserve decreases the required reserve ratio, banks are allowed to lend out more money, increasing the money supply. An increase in the discount rate, on the other hand, would discourage banks from borrowing money from the Federal Reserve, leading to a decrease in the money supply. Decreasing federal tax rates may stimulate economic activity, but it does not directly increase the money supply. Selling government securities in the open market would also decrease the money supply as it takes money out of circulation.

Which of the Following Represents an Action by the Federal