Choice "C" is correct. To decrease the money supply, the Fed can: (1) sell government securities in the open market, (2) increase the discount rate, and (3) increase the required reserve ratio.
Choice "b" is incorrect. The Fed should sell (not buy) securities on the open market.
Choice "d" is incorrect. The Fed should increase (not decrease) the required reserve ratio.
Choice "a" is incorrect. The Fed should increase (not decrease) the discount rate.
