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The primary way the Fed controls the supply of money is by:
What else can I help you with?
What do the feds want to do to the money supply to encourages bank loans?
increase
When the Feds want to increase the money supply it?
The reserve requirement is 0.5. The Fed wants to increase the money supply by $1000.
What does it mean by contract the money supply?
It means to decrease, or lower, the money supply. EXAMPLE: The feds sold treasury bonds and bills in order to contract (decrease) money supply.
Which of the actions is likely to result in an increase in the money supply?
The Feds buy millions of dollars in treasury bonds
What would the effects be if the Feds sold Treasury bonds on the open market?
If bonds are sold then the supply of money decreases.
What is the result of lowering the reserve requirement?
the mooney supply will go down because the feds do not make any money
Are there other tools used by the feds to increase money supply?
The Federal Reserve (or Fed) increases the money supply by buying back outstanding U.S. Gov't Securities (bonds and such). By doing so, they are adding more currency into the economy, thus increasing the supply of money, or money supply. Conversely, the Fed can also lower the money supply. To do so, they simply sell U.S. Gov't Securities. This means that they sell bonds out and bring currency in, thus reducing the money supply.
What explains why the money supply is increased when the Feds buy treasury bonds?
When the Fed buys Treasury bonds, it increases the amount of deposits in people's bank accounts.The purchase of bonds increases the amount of deposits in people's bank accounts, which enables banks to loan more money
What best explains why the money supply is increased when the feds buys treasury bonds?
When the Fed buys Treasury bonds, it increases the amount of deposits in people's bank accounts.The purchase of bonds increases the amount of deposits in people's bank accounts, which enables banks to loan more money
What best explains why the money supply is increases when the feds buys treasury bonds?
When the Fed buys Treasury bonds, it increases the amount of deposits in people's bank accounts.The purchase of bonds increases the amount of deposits in people's bank accounts, which enables banks to loan more money
What effect will the feds sells 5 billion worth of treasury bonds on the open market have on the money supply?
The Federal Reserve Bank can buy and sell these bonds to raise or lower bank deposits.
Why does the the federal reserve system have a high degree of political independence?
It is due to the desire of the American people and government at the time of the feds establishment to have more control over the flow of money to prevent depressions and overall economic collapse. The effectiveness of their policy has always been debated.
