​Which of the Following Policies Can the Fed Follow to Increase

question 199

Multiple Choice

​Which of the following policies can the Fed follow to increase the money supply?

• A)​Reduce the interest rate on reserves
• B)​Increase reserve requirements for banks
• C)​Reduce the quantity of funds available through the Term Auction Facility
• D)​Sell government bonds

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Definitions:

Annual Lease

An agreement where a lessor allows a lessee to use a property for a period of one year in exchange for payment.

Entrepreneur's Forgone Interest

The potential interest income sacrificed by an entrepreneur when choosing to invest personal funds into their own business rather than in an interest-bearing account.

Long-Run Average Cost

The per-unit cost of production in the long-term, where all input factors are variable, indicating economies or diseconomies of scale.