Both in present times and in the past, the Fed has used three tools to influence the money supply. Sort the below Fed actions into the following:
1. increase the money supply (Increase),
2. decrease the money supply (Decrease),
3. or not a tool available to the Fed (Not a tool).
a. The Fed raises the interest rate charged on loans to banks
b. The Fed authorizes a one time tax rebate of $1,000
c. The Fed reduces the ratio of deposits banks must hold on reserve
d. The Fed sells $200 million in mortgage-backed securities.
e. The Fed buys $100 million in short-term Treasury securities
f. The Fed sells $300 million in long-term Treasury securities.
Categories Increase Decrease Not a tool

Increase money supply ⇒ Fed buys securities with dollars thereby pumping money into the system. Fed can also reduce deposit ratios to be held in reserve thereby increasing money banks can lend out.

Decrease money supply ⇒ Fed raises interest rate on loans it charges to banks so that they borrow less thereby reducing money supply. They can also sell securities so people buy with dollars and reduce the money in the financial system.

Increase the money supply

c. The Fed reduces the ratio of deposits banks must hold on reserve  

e. The Fed buys $100 million in short-term Treasury securities

Decrease the money supply

a. The Fed raises the interest rate charged on loans to banks  

d. The Fed sells $200 million in mortgage-backed securities.  

f. The Fed sells $300 million in long-term Treasury securities.

Not a tool available to the Fed

b. The Fed authorizes a one time tax rebate of $1,000.

the answer is a.

by: nicholas dooley

anyone below or above ambitious can tell you. so crowns mean brainliest. getting brainliest means your answer needs a good explanation and the person asking the question can understand your answer easily. so say there's a multiple choice question. you don't just want to say your answer is a, hope it . provide evidence and reasoning so that they know that that is the correct answer. a good explanation should have evidence, good reasoning, and your opinion on why you picked that. you don't want to look up their question on the internet and see if you can answer it. pick questions that you 100% know the answer to, so than that way you can provide a better explanation.

best of luck,

the divergent