Question 6 Quantitative easing involves the Federal Reserve: O buying long-term government bonds. O lending reserves directly to banks. O competing with investment banks for Treasury securities. providing reserves to banks through an auction.Question 2 2 pts If the average reserve ratio in the banking system is 20% and the Fed increases bank reserves by $100,000, what will be the total potential increase in the money supply? O $100,000 O $500,000 O $120,000Question 1 When the Fed buys short-term Treasury securities, short-term interest rates: O stay the same. O fall O rise. O could rise or fall.Question 4 What was the rationale for the Fed lending billions of dollars to the insurance company American International Group (AIG)? O If AIG collapsed, the insurance industry would as well. O The Fed was following a long-time precedent in rescuing top insurance companies. O The Fed knew it would receive a high return on the loan. O AIG's bankruptcy would pose a systemic risk to financial institutions