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Which of these can affect the economy by increasing or decreasing the money supply?
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?
"Explain how different monetary policies affect the money supply in the economy?"
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 is a money supply?
The total supply of money in circulation in a given country's economy at a given time.
What money supply growth exceeds the growth of the overall economy what is the result?
Inflation
How quantity of money is measured?
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.
How does the Fed increase the money supply when it buys bonds?
When it buy bonds- that money goes into the economy hence increasing the money supply
The money supply of the country is made up of what?
all the money available in an economy
What money supply of a country is made up of?
all the money available in an economy
What is the money supply of a country made up of?
all the money available in an economy
How do changes in interest rates affect money supply?
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.
Why was the creation of a national bank so important to the U.S economy?
The national bank controlled the money supply
