0
If the FED decreases the money supply in the short-run what happens?
Wiki User
∙ 11y ago
According to the great Milton Friedman, a decrease in the money supply is was a major contributor to The Great Depression. As far as I can tell, the only reason the FED would do this is to cause massive sell offs of assists in order for people who are in cahoots with the FED to buy up everything on discount.
Wiki User
∙ 11y ago
Add your answer:
Earn +20 pts
How does raising the discount rate affect the money supply?
Decreases the money supply
What happens when GDP decreases?
theres less money
Why is the money supply decreased when the Fed sells some of its Treasury bonds?
Selling bonds decreases the amount of money that bondholders have in the bank.
What are the roles of money supply in the economy?
Money supply determines the value of money i.e. if there are a lot of money in an economy, the value decreases and the other way around. Therefore, money supply essential decides the price of a good (if the money is worth less, the prices go up ...etc...) Hence, according to monetarists, money supply is the key ingredient of inflation (and deflation)
If there an increase in the money supply that causes prices to rise and leads to inflation what happens to money?
If there is a increase in money supply that is causing price to rise money only does one thing. The money that is taking is used for supply.
How does raising the discount rate affect the money supply?
Decreases the money supply
What happens when GDP decreases?
theres less money
When banks make loans the money supply increases or decreases?
When banks make loans, the money supply increases, since the people who receive these loans will have more money.
When interest rate is positive what happens to value of money?
Decreases
When interest rate is positive what happens to the value of money as?
decreases
When the federal reserve decreases the money supply it generally does by selling bonds true or false?
It is true that when the Federal Reserve decreases the money supply it generally does by selling bonds. When the Federal Reserve sells bonds it pushes prices down and increases rates.
Why is the money supply decreased when the fed sells some of its treasury bond?
Selling bonds decreases the amount of money that bondholders have in the bank.
Why is the money supply decreased when the Fed sells some of its Treasury bonds?
Selling bonds decreases the amount of money that bondholders have in the bank.
What are the roles of money supply in the economy?
Money supply determines the value of money i.e. if there are a lot of money in an economy, the value decreases and the other way around. Therefore, money supply essential decides the price of a good (if the money is worth less, the prices go up ...etc...) Hence, according to monetarists, money supply is the key ingredient of inflation (and deflation)
What if there is an increase in the money supply that causes prices to rise and leads to inflation what happens to money?
If there is a increase in money supply that is causing price to rise money only does one thing. The money that is taking is used for supply.
If there an increase in the money supply that causes prices to rise and leads to inflation what happens to money?
If there is a increase in money supply that is causing price to rise money only does one thing. The money that is taking is used for supply.
If there is an increase in the money supply that causes prices to rise and leads to inflation what happens to the money?
If there is a increase in money supply that is causing price to rise money only does one thing. The money that is taking is used for supply.
