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monetary policy is the use of money supply and interest rate to control the supply of money in an economy.
Usually, the main use of monetary policy is to control inflation.
e.g. when interest rate is high, people don't spend as much (and some may even save more), reducing the pressure on demand/supply, reducing the price level i.e. decreased inflation.
It can work on reverse if the interest rate is put up (if inflation is dangerously low - close to point of deflation.)
Alternatively, government can sell/buy assets so as to withdraw/inject more money into an economy.
Wiki User
∙ 13y ago
Wiki User
∙ 13y agoTo increased money supply will lower interest rates. In people will buy more of the supply if recession output goes down.
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What government agency conducts monetary policy in the United States?
The Federal Reserve is responsible for managing the money supply in the U.S.
What is an example of monetary policy strategy of the Federal Reserve?
decreasing the money supply to slow the economy
What monetary policy strategy of the Federal Reserve do these headlines?
Decreasing the money supply to slow the economy
Efforts by the federal reserve system to control the money supply and interest rates are known as what?
Monetary Policy
Who borrows money from federal reserve banks?
All member banks of the Federal Reserve in USA can and do borrow money from the federal reserve. The Federal Reserve is the banker of banks to whom the banks go when they need money.
What government agency conducts monetary policy in the United States?
The Federal Reserve is responsible for managing the money supply in the U.S.
What does a tight money policy means .?
the Federal Reserve wants to decrease the amount of money in the economy
Which action can the Federal Reserve take to pursue a tight-money policy?
decrease the amount of money in the economy
Who decided on the interest fate policy?
I believe that it is the Federal reserve who decides on the interest policy, as well as the money supply
What does A tight policy means?
the Federal Reserve wants to decrease the amount of money in the economy
What is an example of monetary policy strategy of the Federal Reserve?
decreasing the money supply to slow the economy
What monetary policy strategy of the Federal Reserve do these headlines?
Decreasing the money supply to slow the economy
Where is money sent after its made?
When money is minted, the first place it goes is the Federal Reserve. The Federal Reserve is like the ultimate lender. All banks get their money from the Federal Reserve.
Efforts by the federal reserve system to control the money supply and interest rates are known as what?
Monetary Policy
What best describes The US Federal Reserve System A Is responsible for monetary policy and money supply B Prints money C Keeps the country out of debt D Helps people in need E None of the above?
The US Federal Reserve System A Is responsible for monetary policy and money supply.
Who borrows money from federal reserve banks?
All member banks of the Federal Reserve in USA can and do borrow money from the federal reserve. The Federal Reserve is the banker of banks to whom the banks go when they need money.
Which of the monetary policy tools can alter both the level of excess reserve and the money multiplier?
the federal funds rate
