Question 45 When the Fed decreases the discount rate, banks will borrow more from the Fed, lend less to the public, and so the money supply will increase. less to the public, and so the money supply will decrease. more to the public, and so the money supply will increase. more to the public, and so the money supply will decrease. Question 46 In a 100-percent-reserve banking system, O the Fed can increase the money supply with open market sales. banks can create money by lending out reserves. O banks hold as many reserves as they hold deposits. banks can create money by issuing currency.
