To increase money supply in circulation, the CB can do the following except a. decrease...

To increase money supply in circulation, the CB can do the following except
a. decrease government expenditure
b. c and d
c. increase taxes
d. buy government bonds
e. decrease bank reserve requirement?

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Answers (2)

isaaq
3 months ago
Answer
B. c and d

Open market operations consist of the buying and selling of government securities by the Fed. If the Fed buys back issued securities (such as Treasury bills) from large banks and securities dealers, it increases the money supply in the hands of the public.
Gaby
3 months ago
The Fed can influence the money supply
by modifying reserve requirements,
which generally refer to the amount of
funds banks must hold against deposits
in bank accounts. By lowering the
reserve requirements, banks are able to
loan more money, which increases the
overall supply of money in the economy.
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