The US government is worried that unemployment is increasing because the money supply is too low. How might monetary policy be used to increase the money supply? Group of answer choices

The Federal Reserve could decrease the corporate tax rates.

The Federal Reserve could increase the interest on reserves.

The Federal Reserve could purchase government bonds.

The Federal Reserve could raise the discount rate.

Question

Social Studies

Atkins

12 April, 12:24

The US government is worried that unemployment is increasing because the money supply is too low. How might monetary policy be used to increase the money supply? Group of answer choices

The Federal Reserve could decrease the corporate tax rates.

The Federal Reserve could increase the interest on reserves.

The Federal Reserve could purchase government bonds.

The Federal Reserve could raise the discount rate.

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Answers (1)

Know the Answer?

Philip Buckley · Answer 1

The Federal Reserve could increase the interest on reserves.

Explanation:

The government could increase the interest rates in order to increase the money supply.

A country goes through unemployment when they do not have enough jobs available because the worth of their currency has fallen. There are high inflation rates and the government does not have enough supply to go around with.

Raised interest rate would lead the government to increase their currency rate. This means that the interest incurred would allow the government to fill up their reserves.