Question

The Fed can influence the money supply by a. changing how much it lends to banks. b. changing the interest rate it pays banks on the reserves they are holding. c. using open-market operations. d. All of the above are correct.

Answer 1

Answer:

d. All of the above are correct.

Explanation:

The Federal government can influence money supply in the economy by all the above mentioned options and more.

Increase or decrease in interest rate could decrease or increase money supply. Open market operations as well as changing the volume of money lent to banks by the central bank can influence money supply.