Math

QuestionHow will the Fed's policy action change the money supply? Use only the actions corresponding to your choice in the previous part.
The money supply increases The money supply decreases \square \square
Answer Bank
The Fed buys bonds The Fed sells bonds The Fed buys foreign currency The Fed sells foreign currency
The Fed increases the reserve ratio The Fed decreases the reserve ratio
The Fed increases the rate at which it lends to member banks The Fed decreases the rate at which it lends to member banks

Studdy Solution
The Fed increases the rate at which it lends to member banks: This makes borrowing more expensive for banks, discouraging lending and decreasing the money supply.
The actions that increase the money supply are: - The Fed buys bonds - The Fed decreases the reserve ratio - The Fed decreases the rate at which it lends to member banks
The actions that decrease the money supply are: - The Fed sells bonds - The Fed increases the reserve ratio - The Fed increases the rate at which it lends to member banks

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