Final answer:
To tighten the money supply, the Fed should raise the discount rate and sell Treasury securities.
Explanation:
To decrease (tighten) the money supply, the Fed should raise the discount rate and sell Treasury securities in the open market. When the Fed raises the discount rate, it signals a reduced U.S. money supply and higher overall interest rates. Selling Treasury securities in the open market results in a decrease in the money supply.
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