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The Federal Reserve Board can affect the economy by increasing or decreasing the money supply.
"Explain how different monetary policies affect the money supply in the economy?"
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.
The total supply of money in circulation in a given country's economy at a given time.
Inflation
In an economy, the quantity of money is measured by the Money Supply. This is the amount of money available in an economy in a specific period of time.
When it buy bonds- that money goes into the economy hence increasing the money supply
all the money available in an economy
all the money available in an economy
all the money available in an economy
When the interest rates are high, people would prefer to save than holding money. That means money supply in the economy is decreased. Whereas when the interest rates are low people prefer to hold money and spend, means increased money supply in the economy.
The national bank controlled the money supply