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To increase the monetary base, the Fed can buy government bonds or increase lending to banks....

To increase the monetary base, the Fed can

buy government bonds or increase lending to banks.

buy government bonds or decrease lending to banks.

sell government bonds or increase lending to banks.

sell government bonds or decrease lending to banks.
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Answer #1

To increase the monetary base , the federal can buy government bonds or Increase lending to banks.

Monetary base refers to the total money in circulation and in the form of reserves with the commercial banks. Through open market operations Federal buys or sell Government bonds. To increase the monetary base in the economy, the federal buys Government bonds. This increases monetary base in the economy. the money creation capacity of the commercial banks increases. The lending capacity also increases. Lending money to the commercial banks can also increase Monetary base.

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