Which of the following Fed actions would both decrease 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

Selling bonds reduces the amount of money in circulation, and raising the reserve requirement means that banks must hold more of their deposits as reserves, thereby decreasing the amount of money available to lend out. Both of these actions would decrease the money supply.

Which of the Following Fed Actions Would Both Decrease the Money