Asked by Britney Xiong on Apr 24, 2024
Verified
Which of the following actions would have the effect of increasing the supply of money and credit and lowering interest rates?
A) The Fed buys government securities.
B) The Fed raises the margin requirement.
C) The Fed raises the reserve requirement.
D) The Fed raises the discount rate.
Margin Requirement
The minimum amount of equity that must be maintained in a margin account to collateralize a position in the securities market.
Reserve Requirement
A regulation that sets the minimum amount of reserves a bank must hold against customer deposits, intended to ensure bank liquidity.
- Comprehend the impact of federal monetary policies on economic expansion, interest rate variations, and credit accessibility.
- Determine the techniques and resources the Federal Reserve utilizes to affect economic behavior.
Verified Answer
HS
HAMZA SHAKEEL7 days ago
Final Answer :
A
Explanation :
When the Fed buys government securities, it injects money into the banking system, increasing the supply of money and credit. This action typically leads to lower interest rates as there is more money available for lending.
Learning Objectives
- Comprehend the impact of federal monetary policies on economic expansion, interest rate variations, and credit accessibility.
- Determine the techniques and resources the Federal Reserve utilizes to affect economic behavior.
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