Which of the following lists two things that both increase the money supply?
A) Raise the discount rate and make open market purchases.
B) Raise the discount rate and make open market sales.
C) Lower the discount rate and make open market purchases.
D) Lower the discount rate and make open market sales.

Question

Quizplus · Accepted Answer

Lowering the discount rate encourages banks to borrow more from the Federal Reserve, which increases the money supply. Open market purchases involve the Federal Reserve buying government securities from banks, which also increases the money supply by giving banks more funds to lend out.

Which of the Following Lists Two Things That Both Increase