How the Fed decreases the money supply.

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If the Required Reserve Ratio is 0.10, what does the Fed need to do to contract the supply of money by $40 billion? Select one: a. Buy $2 billion worth of government bonds from banks b. Buy $4 billion worth of government bonds from banks c. Buy $8 billion worth of government bonds from banks d. Sell $4 billion worth of government bonds to banks e. Sell $2 billion worth of government bonds to banks f. Sell $8 billion worth of government bonds to banks

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Chapter 29, Problem 5QCMC

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How the Fed decreases the money supply.

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If the Required Reserve Ratio is 0.10, what does the Fed need to do to contract the supply of money by $40 billion? Select one: a. Buy $2 billion worth of government bonds from banks b. Buy $4 billion worth of government bonds from banks c. Buy $8 billion worth of government bonds from banks d. Sell $4 billion worth of government bonds to banks e. Sell $2 billion worth of government bonds to banks f. Sell $8 billion worth of government bonds to banks

When the Fed wants to reduce the supply of money circulating in the country, it will sell treasuries? True or False

If the Fed wishes to increase the money supply then it can and should: increase the required reserve ratio. increase the discount rate (increase the interest rate). buy government bonds on the open market start printing $1,000 bills.