Question

f the Fed wishes to increase the money supply, it can: Multiple Choice sell a bond to bank, and take the money it receives in exchange out of circulation in the economy. buy bonds from a bank, giving the bank cash in return, which it can then lend out. sell a bond to a bank, and take the money it receives and lend it out to someone else. buy a bond from a bank, requiring the bank to hold the money it receives as excess reserves.

Answer 1

buy bonds from a bank, giving the bank cash in return, which it can then lend out.

Step-by-step explanation:

The above option is the way in which the Feds can increase money supply in the country. For example, if a bank advertise #30 billion worth of bond to the public, the Fed could buy $28 billion worth of bond thereby offering the bank enough liquidity and cash to lend out to those in need of it.