When the Federal Reserve increases the discount rate, the money supply is likely to decrease.
Explanation: The discount rate is the interest rate at which commercial banks can borrow from the Federal Reserve. When this rate increases, it becomes more expensive for banks to borrow money. As a result, banks may reduce the amount of money they lend to businesses and consumers. With less borrowing and lending, there is less money circulating in the economy, which can lead to a decrease in the overall money supply. Therefore, option b is the correct answer.