Describe the effect each action below will have on the money supply and explain your reasoning. 1. The Fed raises the discount rate from 5 percent to 10 percent.
2. The required reserve ratio is lowered from 20 percent to 10 percent.
3. The Fed sells $5 billion worth of Treasury bonds on the open market.
4. The Fed buys $5 billion worth of Treasury bonds on the open market
5. Banks decide to keep more of their assets as reserves in order to avoid risking a shortage of the required reserve.