Which of the Following Would Likely Increase the Money Supply

question 36

Multiple Choice

Which of the following would likely increase the money supply?

• A)The purchase of government securities by one bank from another bank
• B)An increase in the required reserve ratio
• C)An increase in the reserves of a commercial bank
• D)An increase in the discount rate
• E)The sale of government securities by a bank to the Fed

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Definitions:

Bank Accounts

Financial accounts maintained by individuals or businesses in a banking institution for the purpose of managing money.

Takings Clause

A clause in the Fifth Amendment of the U.S. Constitution requiring that when government uses its power to take private property for public use, it must pay the owner just compensation, or fair market value, for the property.

Condemnation

The legal process by which government or a legal entity takes private property for public use, with compensation to the owner.

Fifth Amendment

An amendment to the U.S. Constitution that provides several protections to individuals, including protection against self-incrimination and double jeopardy, and ensures due process of law.