If the Fed wanted to increase the money supply, they could:

Name: If the Fed wanted to increase the money supply, they could:
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Question

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By decreasing the reserve requirement, banks are required to hold less money in reserves and can lend out more money, increasing the money supply. Decreasing the reserve ratio would also have the same effect, but this is not an option listed in the question. Increasing the reserve requirement or ratio would have the opposite effect, decreasing the money supply.

If the Fed Wanted to Increase the Money Supply, They