The best way to reduce the supply of money in the economy is to?
Answer Details
To reduce the supply of money in the economy, the best option is to increase the liquidity ratio. The liquidity ratio refers to the percentage of a bank's assets that must be held in cash or other highly liquid assets, such as government securities. By increasing the liquidity ratio, banks are required to hold more money in reserve, which means they have less money to lend out to customers. This decrease in lending will lead to a reduction in the supply of money in the economy. The other options listed are likely to increase the supply of money in the economy, as they involve increasing the availability of credit or decreasing government securities.