Question

What countermeasure could it take to prevent the Congress from expanding the money​ supply? A. Increase regulations to prevent the expansion of the money supply. B. Sell government securities to prevent the expansion of the money supply. C. Buy government securities to prevent the expansion of the money supply. D. Lower the discount rate to prevent the expansion of the money supply.

Answer 1

Answer:

B. Sell government securities to prevent the expansion of the money supply.

Explanation:

• The federal reserve can expand the money supply by modifying the money supply and refers to the amounts of the finds the banks must hold against the deposits and thus by allowing the reserves needs the banks are able to load more money and increases the supply in the economy. Thus by selling the securities the banks can control the supply and interest rates and is called an open market.