The Federal Reserve increases the money supply by __________?

The Federal Reserve increases the money supply through open market operations by buying U.S. Treasury bills. When the Fed purchases these securities, it injects money into the banking system, increasing liquidity and encouraging lending and investment.... Read More

1 FINANCE MCQS

The Federal Reserve increases the money supply by __________?

  • Selling Treasury bills
  • Buying Treasury bills
  • Selling Swiss bills
  • Buying Swiss bills
Correct Answer: B. Buying Treasury bills

Detailed Explanation

The Federal Reserve increases the money supply through open market operations by buying U.S. Treasury bills. When the Fed purchases these securities, it injects money into the banking system, increasing liquidity and encouraging lending and investment.

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