The Federal Reserve has a number of ways to influence the supply of money. The Federal Reserve can influence the interest rate that people pay on their loans, regardless of what bank they are using. How might the Fed adjust the interest rate if it wanted to increase the amount of money in circulation?

A. Decrease the interest rate. People would be less likely to take out loans.
B. Increase the interest rate. People would be more likely to take out loans.
C. Increase the interest rate. People would be less likely to take out loans.
D. Decrease the interest rate. People would be more likely to take out loans.

I think it is B.

No.

Why would people pay a higher rate for a loan?

I think it is D then because you don't want to increase the rate.

Yes, D.

I could be wrong but I think it is D. I had a question similar to this one and that was the answer so it should be right.

You are correct! If the Federal Reserve wants to increase the amount of money in circulation, it can adjust the interest rate by increasing it. When the interest rate is higher, people are more likely to take out loans because the cost of borrowing becomes more expensive. This increase in borrowing stimulates economic activity and increases the amount of money in circulation. So option B, "Increase the interest rate. People would be more likely to take out loans," is the correct answer.