Question

To change the money supply, the Federal Reserve most frequently uses: a) changes in the required reserve ratios. b) changes in the inflation rate. c) changes in the discount rate. d) open-market operations.

Answer 1

D) open-market operations.

Step-by-step explanation:

Answer 2

D) open-market operations.

Step-by-step explanation:

The FED carries on open-market operations when it buys or sells existing US treasury bills. If the FED wants to increase the money supply, it will buy US treasury bills from private investors. On the other hand, if the FED sells US treasury bills, it will decrease the money supply.