There are several ways that governments can increase or decrease the money supply. Match the descriptions below with the corresponding policy tool. It is possible that the description does not apply to any of the terms.
a. A government printing more currency.
b. An increase in government spending.
c. An increase in the interest rate that a central bank charges commercial banks for loans.
d. A central bank purchasing existing bonds.
e. An increase in the percentage of deposits that banks must keep on hand.
f. A central bank purchasing a large quantity of longer-term Treasury bonds.
1. Open Market Operations
2. Reserve Requirement
3. Discount Rate
4. Quantitative Easing