Question

Determine the maximum potential extent that the money supply will change following a Federal Reserve monetary policy action.

Short answer

This so-called quantitative easing raises the size of the central bank's balance sheet and injects new cash into the economy when rates can't go any lower. The money supply expands as banks get new reserves.

Step-by-step solution

Federal Reserve monetary policy action. 

In the United States, monetary policy refers to the Federal Reserve's activities and statements aimed at promoting maximum employment, stable prices, and moderate long-term interest rates, which are the economic goals set forth by Congress.

Monetary action increase the money supply.

In the United States, monetary policy refers to the Federal Reserve's activities and statements aimed at promoting maximum employment, stable prices, and moderate long-term interest rates, which are the economic goals set forth by Congress.