Which of the following Fed actions would both increase the money supply?
A)buy bonds and raise the reserve requirement
B)buy bonds and lower the reserve requirement
C)sell bonds and raise the reserve requirement
D)sell bonds and lower the reserve requirement

Question

Quizplus · Accepted Answer

Buying bonds infuses cash into the economy, increasing the money supply. Lowering the reserve requirement allows banks to lend out more money, also increasing the money supply. Selling bonds and raising the reserve requirement both decrease the money supply by removing cash from the economy and limiting the amount of money banks can lend out.

Which of the Following Fed Actions Would Both Increase the Money