When the Federal Reserve System wants to increase the money supply, which of the following actions would the Fed choose?
a. It purchases U.S. government securities.
b. It increases the discount rate.
c. It increases the required reserve ratio.
d. It sells bonds on the open market.
Question 2
If the Fed wanted to use all three of its major monetary control tools to decrease the money supply, it would:
a. buy bonds, reduce the discount rate, and reduce reserve requirements.
b. sell bonds, reduce the discount rate, and reduce reserve requirements.
c. sell bonds, increase the discount rate, and increase reserve requirements.
d. buy bonds, increase the discount rate, and increase reserve requirements.
nervous system
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