The FOMC wants to expand the money supply by $120 million and decides to buy bonds on the open market. Suppose the reserve requirement is 40% and banks do not hold any excess reserves.
Which of the following is an alternative monetary policy that the Fed could use to expand the money supply?
A. Sells bond on the open market
B. Decrease the rate banks charge their customers for auto loans
C. Lower the reserve requirement
D. Increase the discount rate