To increase the monetary base, the Fed can:
A) conduct open-market purchases.
B) conduct open-market sales.
C) raise the interest rate paid on reserves.
D) lower the required reserve ratio.

Question

Quizplus · Accepted Answer

Conducting open-market purchases increases the monetary base by adding reserves to the banking system, as the Fed buys securities from banks, thereby increasing the amount of money in circulation.

To Increase the Monetary Base, the Fed Can