Question

8. To increase the money supply, the bank central could:
a. Cut taxes
b. Purchase bonds in the open-market
c. Encourage people to held more cash (currency in circulation)
d. Increase the government spending
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Answer 1

Answer:

The Fed can increase the money supply by lowering the reserve requirements for banks, which allows them to lend more money. Conversely, by raising the banks' reserve requirements, the Fed can decrease the size of the money supply.

Answer 2

Answer:

Central banks use several methods, called monetary policy, to increase or decrease the amount of money in the economy. The Fed can increase the money supply by lowering the reserve requirements for banks, which allows them to lend more money.

Explanation:

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