If the Fed Wanted to Expand the Money Supply as Part

question 181

Multiple Choice

If the Fed wanted to expand the money supply as part of an antirecession strategy, it could

• A) increase the reserve requirements imposed on commercial banks.
• B) decrease the interest rate paid on excess reserves encouraging banks to extend more loans.
• C) sell U.S. government securities and other financial assets that it is currently holding.
• D) raise the interest rate on loans extended to banks and other financial institutions.

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